Technical Analysis – Silver prints new 14-month high above 138.2% Fibonacci extension level
Posted on August 7, 2019 at 2:50 pm GMT
Anthony Charalambous, XM Investment Research Desk
Silver was unable to push below the 100-day simple moving average (SMA) at the beginning of the month. Silver found support from the Ichimoku cloud and the 100-day SMA was tested multiple times. After a short-term sideways move, the metal finally broke out of the cloud upwards and rallied past the previous thirteen-month high of 16.64, as well as the 138.2% Fibo extension level of the downleg from 16.20 to 14.28, printing a nearly fourteen-month new high of 17.08.
A bullish cross of the 20-day SMA above the 50-day SMA has occurred on the breakout of the cloud, whilst the MACD has distanced itself above its red trigger line in the positive region. Despite the signaled bullish directional momentum, the RSI is flat in the overbought area, which may warn of a pause in the up move or a short-term correction.
To the downside, a pullback encounters its first support region at 16.64 – 16.57, which are inside swing highs. Falling lower some friction may appear from the 20- and 50-day SMAs before re-entering the cloud near the 100-day SMA. If the cloud is breached and the immediate support levels of 16.20 – 16.13 are broken, the 15.91 swing low may be tested again.
Climbing higher, the price of silver would need to breach the 17.34 resistance from April of 2018 before it can try to surpass the 161.8% Fibo extension level of 17.39.
Overall, the short- and medium-term positive bias is persisting, whilst a close below the swing low of 15.91 could give a chance to turn the bias neutral.