Silver Breaks Below Triangle/Pennant Pattern
After testing $30/oz back in early August and failing to move higher silver has had two significant pullbacks in price. The first was in mid-August which saw price fall from near $30/oz to a low of $23.40/oz on August 12th. The second significant pullback was today which saw price fall from nearly $27/oz at the open of trading today to a low of $23.71/oz-and an ultimate closing price of $24.71/oz.
Today's pullback held just above Support 1 which stems from the August 12 low which was made during the first significant pullback after silver tested $30/oz. Should this support level fail to hold going forward, Support 2 is the next level I'm watching and stems from the long-legged doji candle low on July 28th.
Long-legged doji candles are price candles where the open and close for the period are at, or near, the same price which creates a small candle body. The wicks, or legs, of the doji candle are long in length and show extreme moves up and down in price during the candle period. A small body and long wicks creates a long-legged doji candle and they are a sign of trader indecision. Since price ultimately moved higher after the July 28th doji candle it indicates that traders went from being undecided to bullish, and that the low of the doji candle should be the short-term low for the next rally. Price rallied to $30/oz on August 7th, declined to $23.40/oz on August 12th and is now testing that August 12th low again at Support 1.
The Price Percent Oscillator(PPO) is showing the green PPO line trending below the purple signal line with both lines trending down. This indicates short-term bearish momentum in price. The green PPO line is crossing below the 0 level which indicates that intermediate-term momentum is turning bearish as well.
The Average Directional Index(ADX) show the purple directional line has crossed above the green directional line which indicates that price has shifted from a bullish trend to bearish. The histogram in the background is flat, should it begin to rise it would indicate increasing strength in the bearish trend. Overall the ADX is showing a weak bearish trend in price.
The Traders Dynamic Index(TDI) show the RSI line has crossed below the lower, blue Bollinger Band which indicates bearish momentum volatility in price. Crossing below the lower BBand has caused the RSI line to turn red which in turn has colored the price candles red as well since the price candle colors are based on the TDI. The background of the TDI is still green which indicates that the intermediate-term momentum in price is still bullish. Overall the TDI is showing a bearish spike in volatility during an overall uptrend in price.
After many were hoping for a bullish resolution of the triangle pattern ie a breakout higher in price, today saw a major pullback to a critical support level. For the immediate short-term trend in price to remain bullish silver needs to hold above Support 1 near $23.40/oz. From there Support 2 near $22.29/oz would be the next likely support level on any potential move lower. The last level of support is Support 3 which is also the base area in price that was made before the swift move to $30/oz. Support 3 is in the $17-$19/oz area.
Overall I'm still bullish on silver price going forward, but a move below Support 2 would indicate that the short-term trend in price is shifting from bullish to bearish. The would require monitoring price for a shift in intermediate-term trends as well.
Today's pullback held just above Support 1 which stems from the August 12 low which was made during the first significant pullback after silver tested $30/oz. Should this support level fail to hold going forward, Support 2 is the next level I'm watching and stems from the long-legged doji candle low on July 28th.
Long-legged doji candles are price candles where the open and close for the period are at, or near, the same price which creates a small candle body. The wicks, or legs, of the doji candle are long in length and show extreme moves up and down in price during the candle period. A small body and long wicks creates a long-legged doji candle and they are a sign of trader indecision. Since price ultimately moved higher after the July 28th doji candle it indicates that traders went from being undecided to bullish, and that the low of the doji candle should be the short-term low for the next rally. Price rallied to $30/oz on August 7th, declined to $23.40/oz on August 12th and is now testing that August 12th low again at Support 1.
The Price Percent Oscillator(PPO) is showing the green PPO line trending below the purple signal line with both lines trending down. This indicates short-term bearish momentum in price. The green PPO line is crossing below the 0 level which indicates that intermediate-term momentum is turning bearish as well.
The Average Directional Index(ADX) show the purple directional line has crossed above the green directional line which indicates that price has shifted from a bullish trend to bearish. The histogram in the background is flat, should it begin to rise it would indicate increasing strength in the bearish trend. Overall the ADX is showing a weak bearish trend in price.
The Traders Dynamic Index(TDI) show the RSI line has crossed below the lower, blue Bollinger Band which indicates bearish momentum volatility in price. Crossing below the lower BBand has caused the RSI line to turn red which in turn has colored the price candles red as well since the price candle colors are based on the TDI. The background of the TDI is still green which indicates that the intermediate-term momentum in price is still bullish. Overall the TDI is showing a bearish spike in volatility during an overall uptrend in price.
After many were hoping for a bullish resolution of the triangle pattern ie a breakout higher in price, today saw a major pullback to a critical support level. For the immediate short-term trend in price to remain bullish silver needs to hold above Support 1 near $23.40/oz. From there Support 2 near $22.29/oz would be the next likely support level on any potential move lower. The last level of support is Support 3 which is also the base area in price that was made before the swift move to $30/oz. Support 3 is in the $17-$19/oz area.
Overall I'm still bullish on silver price going forward, but a move below Support 2 would indicate that the short-term trend in price is shifting from bullish to bearish. The would require monitoring price for a shift in intermediate-term trends as well.