Silver And Palladium Update: False Hope

The price action in the silver futures has given a false hope to bulls this month.

The largest volume support (orange) has offered a solid support for the silver futures price lately. It is located between $17.4 and $18.2. The price has tested it three times already and failed to break it down.

Silver Futures Weekly
Source: TradingView

The RSI has built a Bullish Divergence during the second touchdown at the end of the summer. The reaction was an imminent reversal to the upside. It was promising price action for the bulls as the futures price soared from $17.4 up to $21.3 by the start of this month to book the gain of almost four bucks (22% growth).

Afterwards, the same indicator has failed to break above the 50 barrier in spite of a strong impulse and so did the price rally. It stopped more than half dollar below the moving average (purple).

The price dropped back to the largest volume support after above mentioned failure but bounced then. It has managed to score more than one dollar from the latest valley of $18. This puts the silver futures between the hammer ($21.9, moving average resistance) and the anvil ($18, volume support).

The chart structure of the recent rally looks corrective. This means that the weakness of the price should resume. The next support is located at the following volume area of $15.8.

There are no other significant levels to catch the “falling knife” of silver except the “Flash-Crash” valley in $11.6. The drop to the latter could build a larger corrective structure visible on a bigger map.

The invalidation of the bearish outlook would come with the breakup of the moving average above $21.9.

Last time, your most popular answer was that silver futures would stop at $16. The next bid was…

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