On Monday silver prices broke below the fairly important support level we had penciled in at 19.20, and we said this old support is now new resistance. So far, it has proven to be a difficult hurdle for the metal to climb back over, reinforcing its legitimacy as resistance.
Silver sits in a zone of support in the 18s from a long-term perspective; lows carved out during 2013/14, a peak in early 2015, then a recent swing low created on 8/29 at 18.37. Even though it is in that zone, it doesn’t mean it doesn’t have room to move about in either direction when looking at the very short-term.
So for now, until silver gives us a good look on the daily we will continue to focus on set-ups on the intra-day time-frame. On the hourly chart we can see a nicely developed symmetrical triangle nearing completion. Given the proximity of current price to the apex it is due to bust today or tomorrow at the very latest.
The direction of the trend prior to its development is down, which suggests this is a consolidation pattern before resuming lower, however; it could break higher out of the pattern as it did back to start the month. That is the nature of the beast – triangles/wedges show situations where volatility has contracted and set to rise again, direction to be determined upon breakout.
With that in mind, we will wait for the break before making a commitment. The roughly 55 cent height of the formation suggests a move to ~19.55 or ~18.33 (near August low) at the least. A break higher will find silver contending with the 19.20 level again, so we will need to watch how it reacts at that level should it reach it.