To date, silver has had a lacklustre year with the silver bears continuing to growl each time a weak rally threatens to move the industrial metal higher and away from the current floor at $14.40 per ounce where it has been anchored on the daily chart since the last quarter of 2018. And the place to start for an analysis of where next for silver is the weekly chart.
One aspect of this timeframe stands out perhaps more than any other, and this is the immensely powerful ceiling of resistance built at $16.80 per ounce, and whilst it is some distance away from the current price action, at some point in the future, this will be key to any meaningful advance higher. Here we have two very well developed regions on the accumulation and distribution indicator acting in concert as a cluster, and so double the resistance in this area.
The current price action reflects the inherent weakness in silver, and despite injections of momentum courtesy of the dollar, this has provided little in the way of follow through, with each effort to rally then overwhelmed by the bears as silver continues to consolidate around the volume point of control at $14.80 per ounce. Volume for the 4th of July holiday was average due to the shortened trading week, with the price action once again confirming weakness and closing with a wide spread down candle. Last week’s price action also looked weak on yet another failed attempt to rise on low volume. With some well developed resistance now in place at $15.60 per ounce, we will need to see a sustained move away from the volume point of control denoted with the yellow dashed line, and accompanied with good volume before silver is likely to establish any longer term bullish momentum. In the short term expect further congestion for the metal at the volume point of control.
Moving to the daily chart, this reflects the weekly analysis, with well developed resistance in place at $15.52 per ounce, $15.33 per ounce and $15.20 per ounce. However, the last of these levels was tested in last Friday’s trading session. At the volume point of control, we also have a well developed area of potential support denoted with the blue dashed line, so two reasons to expect consolidation at this level. Note also the trend monitor indicator which is now in transition from bullish to bearish with the yellow trend line starting to descend and move away from the fulcrum at the midpoint. All of which presents a rather gloomy picture for silver investors in the longer term. For intraday scalpers it’s just a question of being on the right side of the market.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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