Silver (XAG/USD) Price Forecast: Bounce Holds as Key Resistance Looms
NEW YORK (February 10) Silver is stabilizing above the 50-day average, but upside momentum remains limited as price approaches layered resistance near the 20-day average within a wide consolidation range.
Silver continued to show short-term strength on Tuesday, as it held above the 50-day average for a second day. Momentum was subdued, resulting in a relatively narrow range inside day. Before it has a shot at a higher bounce, it needs to sustain a reclaim of the 50-day average, now at $78.60.
Spot silver daily chart shows retention of 50-day average support. Source: TradingView
Upside Trigger Targets 20-Day Average Resistance
A breakout above Tuesday’s high of $84.03 signals a continuation of the bounce towards the 20-day average at $92.84. That level is also highlighted as resistance by a lower swing high at $92.20 and a 50% retracement at $92.87. The 20-day average was already tested once as resistance since the sharp January 30 breakdown, and it led to last Friday’s swing low at $64.06. Buyers took back control following a successful test of support at the top of a rising trend channel. A breakout of the channel triggered in early-December above $59.34.
$64.06 Low Marks Critical Support Level
The sharp advance that followed the $64.06 low suggests that it may have completed the bearish correction. That would make that low a key support level. However, if the current bearish ABCD patten does not end the correction and falls below $64.06, silver heads deeper into the channel formation. That would show weakening of the trend.
Spot silver daily chart shows bounce at support atop rising channel. Source: TradingView
Channel Structure Supports Long-Term Bull Trend
Last weeks low ended the first pullback following a breakout of the channel. It confirms the long-term bull trend as previous resistance has flipped to support. This is bullish behavior, if the top of the channel remains as a support area. The next decision area comes at possible resistance at the 38.2% Fibonacci retracement of the full decline from the January peak (A) at $86.07. Since the 20-day average has already been proven once as resistance, it may remain so for a while longer.
Wide Trading Range Defines Key Support and Resistance
Until silver can reclaim the 20-day average, it remains key dynamic resistance, and the swing low is important support. That provides a relatively wide range of $92.82-$64.06 for silver to consolidate within. Price levels to watch for support inside the range include a swing low at $71.32 and $70.07.
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