Chart of the Day: Silver New Target

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Despite the recent rise in US bond yields and in, it rallied sharply yesterday and looks set to boost those gains as of the time of this writing.
Metal seems to have become the ultimate target of Redditors who are restricted on some platforms in their ability to trade highly short-selling stocks like GameStop (NYSE 🙂 and AMC Entertainment (NYSE :).
Some posts posted on Reddit’s WallStreetBets forum yesterday urged users to flock to the largest silver exchange traded fund, iShares Silver Trust (NYSE :). This was probably the factor behind the biggest daily rally Metal has recorded since August.

This rally means that after months of consolidation between $ 25-29, silver gave some bullish signals that a new rally is likely.

Silver Daily Chart

Even ahead of yesterday’s rally, the long-term consolidation without much retreat from the 2020 summit is already a bullish sign in itself, as it points to the market likely not peaking in August. If it did, prices would have dropped more aggressively until now.

Since the peak of just under $ 30, silver has yet to recover even 50% of the gains since the bottom it saw in March 2020. This relatively shallow decline indicates that the long-term bullish trend is still intact and silver has the potential to break out in the near term.

Second, silver’s desire to stay close to the 21-day exponential moving average and still well above the rising 200-day moving average is a sign of a bullish trend.

To support this; Silver broke the recent resistance zone in the range of 25.90 – 26.00 after a sharp 5% rally and gave a clear bullish signal on Thursday. If the exit holds above this zone, the bulls may seek new technical purchases in the coming days.

While the signs are promising for the bulls, it’s important to remember that silver is still technically in a larger consolidation pattern so it’s too early to get excited.

For confirmation, silver now needs to reach a higher peak, above the peak it saw around $ 27.90 earlier this month. A climb above this level will also push silver above the bearish trend line that has been going on since August 2020.

So we need to see this breakout, especially because of the recent rise of the dollar. If silver once again falls below the $ 25.00 threshold, at this point you should leave all your bullish expectations in the short term and wait for new bullish price movements at some point in the future before looking for a long position.

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