Silver Price Analysis: Breaks out above top of four-year range and rallies above $32.00

Source Fxstreet
May 20, 2024 10:06
  • Silver price breaks out of a four-year consolidation zone and rallies strongly. 
  • The precious metal could still go higher once the current pull back ends and the uptrend resumes. 

Silver (XAG/USD) price has broken decisively above key resistance at $30.00 and risen parabolically, hitting its first upside target at $32.28. 

The precious metal has since pulled back to trade just above $32.00 at the time of writing, but it is firmly in an uptrend which – given the old saying that “the trend is your friend” – is expected to continue. 

4-hour Chart 

The Relative Strength Index (RSI) is in the overbought zone, suggesting traders should not add to their long holdings. If the RSI exits overbought on a closing basis it will signal a deeper correction is taking place. 

Any correction is likely to meet initial support at the top of the rising channel, at around $31.20. Given the trend is bullish, Silver is likely to resume rallying after its correction finalizes. 

The decisive break above $30.00 resulted in a steep upside move as it represents the ceiling of a four-year consolidation range. The rally rapidly met the first target at $32.28, the Fibonacci 0.618 extension of the upper part of the consolidation range higher. 

Silver could still go much higher, however, as the break above $30.00 was an important milestone for price and increased confidence could draw more bulls to the trade. The next target to the upside is $33.83, the full height of the range extrapolated higher, followed by $35.34, a key former high.

It would require a decisive break below the rising channel lows in the $29.00s to bring the short-term uptrend into doubt.

A decisive break would be one accompanied by a long red candlestick that closed near its lows or three red candlesticks in a row. 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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