Silver's Price Outlook: Navigating the Bullish Trend After a Sharp Pullback
10-Day Average: A Key Support Level
The 10-day average acts as a critical support zone, established after the November low at $48.64. It has proven its resilience, withstanding the recent decline following the December high of $84.03. The pullback found support at $70.39, and Monday's bullish indicators suggest a potential higher swing low if the price closes above $76.15.
38.2% Fibonacci Retracement: Confirming the Bullish Bias
Silver's price movement confirms the short-term trend's dynamic support, and the pullback completed a 38.2% Fibonacci retracement at $70.39. This level is significant as it generally represents the minimum retracement expected in Fibonacci analysis. Once the retracement is complete, the bulls are poised to regain control, allowing the underlying trend to resume its upward trajectory.
Bearish Reversal: A Potential Momentum Shift
There's a risk that the bullish momentum may falter before reaching a new trend high. After the peak at $84.03, selling pressure intensified, resulting in a bearish outside day with a close in the lower third of the day's range. This bearish behavior was further confirmed by a weekly bearish candle last week, indicating a potential shift in momentum.
Extended Gains and Critical Resistance
Despite the bullish trend structure, increased selling pressure, as indicated by candle formations, suggests a slower ascent to a new trend high. The recent high day completed extended target levels, positioning it near a potential resistance area. Moreover, silver's price surge of $29.79 or 54.9% from the bull breakout level of $54.49 places it in a critical zone, with key support and a new approach towards the $84.03 record high.
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