Silver approached major resistance zone around $27.50/60

Written by

May 7, 2021

Technical Analysis:

Silver has raised through $27.55 levels this morning, alongside most risk assets. The metal has approached a strong resistance zone now and bears might be inclined to take control back soon. Also note that it has almost reached the fibonacci 0.618 retracement of the entire drop between $30.13 and $23.80 levels respectively.

Silver had dropped from $30.13 levels, sub dividing into 5 waves marking a motive wave. The pattern unfolded is a leading diagonal, which terminated around $23.80 mark. The subsequent rally towards $27.55 is just a counter trend, which might be complete.

Looking at the wave structure, Silver has now terminated higher degree Waves (1) and (2) around $23.80 and $27.55 levels respectively. Please note Wave (2) might test $27.60/70 zone before terminating and turning lower again.

If the above structure holds well, Silver might resume lower towards $19.00 and $13.00 levels as Wave (3) begins to unfold. A break below $26.30 from here will confirm a meaningful top is in place and that bears are back in control.

Also note that a potential Head and Shoulder reversal pattern has been unfolding since $23.80 lows. The metal has carved a right shoulder around $27.55 or is very close to termination. If the above is correct, Silver might be heading lower from here soon.

Traders might be preparing to initiate fresh short positions around $27.50/60 levels with a potential target below $19.00 levels at least. Watch out for a bearish reversal from current levels soon.

Prepared by

Finacademy Technical Team

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