Silver Price Analysis: Bearish W-formation could draw in the bid
|- Silver's 1-hour momentum is stalling, giving rise to the prospects of a correction.
- A Fibo analysis of the W-formation on the daily chart acts as a means to measure the downside target.
The price of silver has shot up at the start of the week as investors move away from the greenback ahead of the Federal Reserve's chair Jerome Powell on Tuesday.
Nevertheless, the price has carved out a daily W-formation which is a bearish chart pattern.
Once the momentum starts to slow, bears will look for an entry to target the neckline of the formation or at least a 38.2% Fibonacci retracement of the bullish impulse.
If there is a confluence of both, such as is the case where things stand currently, then this offers additional conviction that the level will be tested.
The following illustrates the prospects of a downside correction from both the daily and hourly chart from where traders can monitor for a bearish environment, structure and optimal entry point.
Daily chart
1-hour chart
On a break of $27.56, prior line char highs, $27.33 as the 38.2% Fibo comes into play as the next downside target.
Meanwhile, the chart's conditions are still bullish and bears will monitor for bearish structure and a shift in technical conditions.
Until then, there is still room for an upside extension.
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