Silver Price Analysis: Silver finds support at June 13 low and consolidates
|- Silver has fallen to key support and is currently consolidating.
- If it breaks below the support it will continue its short-term downtrend within its channel.
- A bounce could also signal a return to the top of the channel and a critical level for Silver.
Silver (XAG/USD) has fallen to a key support level at $28.66, the June 13 low, and is currently trading along that support. It is at a critical turning point for the trend.
The precious metal is in a falling channel formation and the short-term trend is bearish on balance, suggesting the odds favor more downside, albeit with one caveat.
Silver 4-hour Chart
In the last few hours, Silver has bounced off of the $28.66 support level, however, given the trend is bearish and “the trend is your friend” an eventual break lower is expected.
If price pierces below $28.57, the June 26 low, that would probably signal further weakness, with the next target lying at the lower channel line, at around $27.50.
The caveat to this bearish picture lies in the fact that Silver temporarily broke out of the top of the falling channel on June 20, and although it quickly fell back, the fact it breached the integrity of the channel, albeit temporarily, indicates the upper channel line has been weakened and is more likely to be broken again.
If the June 13 lows hold, therefore, and Silver starts to recover, there is a chance it could rise back up to the upper channel line at around $29.90, which is also a major resistance level at the top of a four-year consolidation zone. A decisive break above that level would be required to indicate a change in the short-term trend.
A decisive break would be one accompanied by a long green up candle that broke clearly above the level and closed near its high or three green candles in a row that broke above the level.
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