Last Friday silver retraced to a low of 29.12 to reach an extended downside target of 29.15 from a declining ABCD pattern. During Friday’s decline the prior retracement low of 29.38 failed to maintain support, leading to another and more direct test of support around the 50% retracement level of 29.27. The 29.15 price target was derived from a falling ABCD pattern with the CD leg of the pattern extended by 127.2% of the price change seen in the initial AB leg.
Bounce Off Friday Support
Today, Monday, silver held above last week’s support and began a bounce to retrace Friday’s wide range decline. It next heads up into a price range from around 29.97 to 30.05, derived from last Thursday’s low and a previous swing low, respectively. The 20-Day MA is up at 30.61. Given how far silver has fallen relative to its 50-Day MA and uptrend line (low end of rising trend channel), it wouldn’t be surprising to see silver test those lines as support before the current retracement is complete.
50-Day Trend Support at 28.78
The 50-Day MA is currently around 28.78. A little below the uptrend line is a price range from 28.50 to 28.30 consisting of the 61.8% Fibonacci retracement and the 161.8% extended target for the declining ABCD pattern. Notice that the 50-Day line is now aligned with a prior swing high from May 18 at 28.75.
Since the price of silver rallied back above the 50-Day MA on March 1, the line was successfully tested as support once in early-May. Both lines mark a similar price area and therefore they can be watched together as an area of possible trend support, along with the Fibonacci confluence zone noted above.
Retracement Dominates
On the upside, a definitive breakout above last week’s high of 31.55 would be needed for bullish confirmation at this point. Silver triggered a bullish trend continuation signal for the long-term uptrend a month ago and has further confirmed strength since then. It is anticipated to continue to progress that uptrend once the current retracement is complete. What is more uncertain is the ending dynamic of the retracement prior to a bull reversal that takes silver back to test recent highs.
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This article was originally posted on FX Empire
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