Silver Price Analysis: Breaks out above top of four-year range and rallies above $32.00
- 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.
Author
Joaquin Monfort
FXStreet
Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.
