Is Silver ready to break technical resistance and surge higher?

Januar 29, 2021 10:30

In 2020, the price of silver ended up nearly 50% higher. In a volatile year, full of up and down swings, it rallied from more than 150% from the low of the year to the high. This is why the metal is high on traders’ watchlists this year. 

As you can see from the monthly chart below, silver has broken through key horizontal resistance around the 21.00 price level, shown by the black horizontal line. While the price surged higher after breaking this level it has since settled back down. 

Source: Admiral Markets MetaTrader 5, SILVER, Monthly - Data range: from Sep 1, 2005, to Jan 28, 2021, performed on Jan 28, 2021, at 7:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

The move lower is evident on the daily chart below. As price moved lower it formed a descending resistance line shown in blue. This was the line in the sand which first gave clues on who was in control of the market. 

As the price broke through this level of resistance during December 2020, buyers have been in control. However, the price has not yet run away towards the upside. In fact, the price has settled into a small trading range as external factors influence its direction. 

Source: Admiral Markets MetaTrader 5, SILVER, Daily - Data range: from May 13, 2020, to Jan 28, 2021, performed on Jan 28, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

Currently, the focus for investors has been on the US stock market which has been surging higher, creating less need to speculate on metals. A rising US dollar has also weighed prices down. However, the price has not run away to the downside suggesting there is still some strength left in the market. 

The 4-hour chart below gives us more useful information. It shows price has been moving inside a trading range, shown by the two red horizontal lines. Buyers have managed to break through this level of resistance which could be interesting given the bigger picture context. 

However, to avoid any false breakouts, traders will be looking for the price to create some higher highs and higher lows above the upper resistance line around the 26.00 price level. Evidence is needed to confirm whether buyers are willing to keep on buying the dips above this level. 

Source: Admiral Markets MetaTrader 5, SILVER, H4 - Data range: from Nov 2, 2020, to Jan 28, 2021, performed on Jan 28, 2021, at 9:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

A fall back below into the range could mean a push back to the lower support level. However, if buyers can maintain control the first target will be the previous swing high of 6 January around the 27.00 price level.   

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