Silver breaks below $24.00. Pullback from here?

Written by

March 31, 2021

Technical Analysis:

Silver has broken below major support of $24.00 yesterday. The metal has registered a fresh low around $23.78 before finding interim support. It remains to be seen of bulls are back to produce a meaningful counter-trend rally from here.
Silver had dropped through $11.60 levels in March 2020 and since then has remained in control of bulls until $30.10/20 highs registered on February 01, 2021. The metal had carved an impulse wave between $11.60 and $30.10, clearly subdividing into 5 waves.
If the above impulse wave terminated at $30.10 levels, Silver might be underway to unfold a corrective wave at least towards $18.50/19.00 levels, going forward. Looking at the wave structure since $30.10 highs, the metal seems to have carved a 5 wave drop towards $23.78 levels.
The drop is not an impulse but can be classified as a leading diagonal since the drop has unfolded into 5 waves, unfolding as a 5-3-5-3-5 structure. If the above interpretation holds well, Silver might be preparing for a corrective Wave 2 rally towards $27.50 mark.
Also note that Fibonacci 0.618 retracement of the drop between $30.10 and $23.78 is passing through $27.65 levels, alongside the backside of the support turned resistance trend line. If prices manage to reach there, Silver is expected to face strong resistance.
Alternately, if bears continue to drag prices lower from here, Silver might be unfolding into a Wave 3 lower towards $19.00 levels at least. Either way, the metal remains bearish, and selling on rallies is a safe trading strategy.

Prepared by

Finacademy Technical Team

Related Articles

Gold finds support ahead of $1758 mark

Gold finds support ahead of $1758 mark

Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.

US dollar index carves a potential top at 96.88

US dollar index carves a potential top at 96.88

The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.