The price of silver has moved back above the $23.50 level after the recent record high CPI inflation report from the United States economy and the Ukraine situation caused precious metals to turn sharply higher.
Silver briefly retreated from the $23.50 resistance level, hinting that the recent pullback may be more meaningful than initially thought. However, Friday’s news in the Ukraine caused the shiny metal to make a new high.
A large head and shoulders pattern appears to be forming, and the move back to the $23.50 level could be the start of the completion of the final right-hand shoulders of the bearish pattern.
However, the Ukraine situation would need to be resolved in order for a reversal to happen. If the situation worsens we are likely to see more explosive upside gains in silver prices.
In order for the bearish bias to relent silver needs to rally above the $24.00 level. If this fails to happen the big risk is for silver prices to once again visit the $22.00 support region.
According to the ActivTrader Market Sentiment tool retail traders are slightly less bullish towards the shiny metal, with 83 percent of traders still predicting further price gains ahead.
This sentiment skew is still a concern, as it has been for a long time. The technical only become worrying if we witnessed another rejection from the $23.50 area. Bulls do need to be alert this week.
Silver short-term Technical Analysis
The short-term technicals for silver show that a massive head and shoulders pattern has formed. It appears silver could be in the process of forming a final right hand shoulder to complete the bearish pattern.
According to technical analysis silver prices could collapse towards the $16.00 level if we begin to see weakness below the $21.50 to $22.00 support cluster at any point in time.
A break above the $24.50 level could send a rocket under silver prices towards $27.00, which would invalidate the mentioned bearish price pattern. The Ukraine news will dictate.
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Silver Medium-term Technical Analysis
The daily time frame show that the shiny-metal is bearish, with the metal under its 200-day moving average, and the Ichimoku indicator issuing a bearish sell signal right now.
According to Ichimoku analysis the picture is less clear, as silver is trading back above the Ichimoku cloud. Watch out for a big upside move if the price of silver continues to hold above the Ichimoku cloud.
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