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The price of silver significantly fell in the global market after hitting the critical resistance level at 25.03. Majority of the aggressive price action traders managed to make a decent profit by shorting the silver with the formation of bearish pin bar right at that critical resistance level (25.03). After the extended bearish rally, it found some solid support at 13.64. From that level, the pair started its bullish correction after the formation of bullish morning star pattern in the daily chart. Currently, the price silver is heading towards a cluster of resistance and breaking above that level will be a tough challenge for the bulls. So, looking for a short trade setup near the bearish trend line resistance seems to be more logical on the current market conditions. But the traders are advised to look for bearish price action confirmation signal to justify their trade setup.
Silver weekly chart analysis
Silver weekly chart analysis
From the above figure, you can see how the bears took control of this market after hitting the major resistance level at 25.03. The bulls regain control of this market after forming a bullish morning pattern right at the critical support level at 13.64. From that level, the price rallied higher but eventually found strong resistance at 20.51. This level is going to provide an extreme level of selling pressure to this pair since the level is reinforced with the 61.8% bearish retracement level ( drawn from the high of 25th August 2013 to the low of 13th December 2015). Moreover, we also have a bearish crossover of the 100 and 200 weekly SMA. According to the leading analyst of the reputed Forex broker, the bulls will have a tough time to breach the critical resistance level at 17.66 since it’s reinforced by 200 weekly and SMA and bearish trend line resistance. Right above that level we also have 38.2% bearish Fibonacci retracement level, which is a very strong resistance for this pair.
Potential market movements
We need weekly closing of the price above the critical resistance level at 18.00 to see some fresh buying pressure in the silver. On the contrary, any bearish price action confirmation signal near the major resistance level at 18.00 will be an excellent opportunity to execute fresh sell orders. If the bears manage to take control of this market from that level, the pair is most likely to head towards the nearest critical support level at 16.26. Though this level might offer temporary buying momentum to this pair, weekly closing the price below this level will eventually force this pair towards the key support level at 13.64.
On the upside, we need to clear the major resistance level at 20.51 (61.8% bearish Fibonacci retracement level) to execute fresh long orders. But regaining such strength will be a very hard challenge for the bulls on the present market structure. Considering all the parameters, the traders are advised to look for a short trading opportunity near the massive resistance zone at 18.00-20.00.