Issues surrounding the 20-day MA
If last week’s low holds as support, the bullish technical outlook for silver should continue to improve. However, silver’s recent relationship to the 20-day MA suggests near-term caution. Silver retook the 20-day MA on September 12 and was followed by a sharp rally to a high of 32.96. In other words, the subsequent pullback to test support around the 20-day MA failed. Therefore, further weakness may occur before an expected final positive resolution occurs.
Optimism improved on Friday as silver managed to regain the 20-day MA and close above it. But today’s lower high and lower daily low, combined with a likely weak close, in the lower half of the day’s trading range, show resistance around the 20-day line. That could lead to a retest of the downtrend line and the 50% retracement zone as support, or a move down.
Important support at last week’s low at 30.12
In the event that last week’s low is broken down, the next lower potential support zone is 29.80 to 29.70. That price zone is identified by three indicators. A previous swing high from April starts the price range along with the 50-day MA. On the downside is the completion of the 61.8% Fibonacci retracement. Also keep an eye on the internal uptrend line that ties in with the September 6 interim swing low.
The big picture remains bullish
The big technical picture for silver assumes a long-term rising parallel trend channel starting from the 2022 trend lows. In May and this month there was a failed bullish breakout from the pattern. A bullish breakout attempt on the third channel may be more successful. It could happen once the current retracement in silver completes. Long-term targets, including the potential to reach a bullish flag target of 41.70, make silver worth keeping an eye on as it works through a correction.
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