Extended silver rally reaches critical resistance
|Similar to its richer cousin, gold, silver has seen a sharp relief rebound for the first month-and-a-half of the year, rising more than 12% since the beginning of 2017. In fact, silver’s performance during this time period has substantially eclipsed that of gold.
This rally for both silver and gold has coincided in an expected fashion with a pullback for the US dollar along with continued ambiguity regarding the outlook for US interest rates after the last Fed rate hike in December.
Silver is currently trading in a strong uptrend, but is also entrenched within a longer-term downtrend since the 21.00-area high of July 2016.
The price of silver has currently bumped up against the major resistance imposed by a confluence of factors, including a descending trend line outlining the noted downtrend from July, the key 18.00-area support/resistance level, and the 200-day moving average.
As of this writing, silver has broken slightly above the 18.00 resistance level. If the US dollar continues to fall in the short-term, a clean breakout for silver above 18.00 and the abovementioned resistance factors is a distinct possibility, in which case the next major upside target is at the key 19.00 resistance level, which has not been reached since November of last year. In the opposite event that the price of silver respects resistance with a turn back down at or around the 18.00 level, the next major downside target within the still-intact bearish trend is around the 17.00-area support.
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