- Silver has met resistance at a trendline and is pausing after a bull run.
- It would need to make a decisive break above the trendline to continue its uptrend.
Silver (XAG/USD) has reached a key trendline in the $30s and stalled. It has posted several Doji-like candlestick patterns over the last few days. Dojis are days where the price closes very near to the level where it opened. This is a sign of market indecision.
Silver Daily Chart
Silver has been in an uptrend ever since the early August lows, even though it also corrected back during the second half of the month. As it is a principle of technical analysis that “the trend is your friend” the uptrend in Silver is more likely than not to extend. Therefore, it could go higher. A decisive break above the trendline would confirm a breakout and a follow-through to $32.94, the 0.618 Fibonacci ratio of C leg extended higher.
A decisive break would be one accompanied by a long green candlestick that broke clearly above the level and closed near its high, or three candlesticks in a row that broke above the level.
Although price action has formed several Doji Japanese candles over recent days it has not formed a reversal candlestick pattern such as a Shooting Star, Bearish Engulfing or Hanging Man, for example. As such it is still too early to say the precious metal will correct back lower.
Silver has probably completed a Measured Move price pattern from the August 8 low. Such patterns consist of three waves in a zig-zag. It is another characteristic of these patterns that waves A and C are usually of a similar length. In the case of Silver, A and C reached a similar length. This further suggests prices will pause and take a rest for a while, or even pull back.
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