Silver’s Price Channel Suggest Weak Trend Strength

Silver price started off the month of February with a sparkle as traders tried to push a short squeeze to rail the large institutions.  Since the February 1 high, silver prices have softened and seemed to have settled within a $26-28 price range.

Silver Price Momentum

At the time of this writing, silver prices have increased nearly 10% for the past 30 days and about 57% for the past 12 months.  Nice statistics for the longer-term trend.  Most of this trend is helped along via a weakening US dollar and additional money printing by the Federal Reserve.

Silver’s Current Price Trend

Silver’s current price trend has weakened.  Silver’s price has conformed neatly to a parallel price channel since late November 2020.

Silver’s Price Analysis with Trend Channel

(click to expand the chart)

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Beginning November 30, the channel’s support has held up silver’s pricing on four different occasions (see green highlights).  This is a clear indication that the trend for the past 3 months is higher.

Another neat formation is how this 3-month uptrend has carved a clean parallel price channel.  On two separate occasions, channel resistance has rejected prices leading to large corrections (purple highlights).  The rejection on December 20 led immediately to a 9% dip.  The rejection on February 1 led to a 14% correction.

Pay close attention to the channel mid-line.  For the past 3 months, you can see how price has respected this mid-line on several occasions (orange highlights).

The three lines of the parallel channel (support, mid-line and resistance) suggest this price channel is well respected by the price chart.

What Can We Infer Regarding Silver’s Price Forecast?

A simple way to analyze the prices is to see which half of the channel prices are residing.  Silver prices are currently in the lower half of the channel.  This suggests prices are in a relatively weak trend.

It is certainly possible that silver’s price can jump higher into the upper half of the channel.  However, until prices break above the mid-line, we cannot rule out a weak trend.

What is the Key Price Level to Follow for Silver Futures?

So long as silver futures price remains above $26.07, then we can assume the bullish trend is in place.  However, a price break below $26.07 means silver futures would have broken below the price channel AND broken below the February 18 low.

This type of price behavior is especially bearish the metal.

If silver futures are successful in continuing to drive higher, the keep an eye on the channel mid-line and channel resistance as potential pivot levels.

Silver Trading Frequently Asked Questions

Why do traders typically lose?

Traders, including silver traders, can find themselves losing over the long-run because they are not matching their strategy to the market conditions.  In this analysis we discussed silver’s price trend which is only one step of the analysis.

We wrote this report as to why traders tend to miss their profitable expectations.  Grab the report when you join the Trading Price Newsletter sponsored by TradingPedia.