Silver incurred one of it’s most volatile trading weeks on record last week, as metals reacted to a rate cut from the Federal Reserve and safe-haven demand from investors.
Silver price technical analysis shows that a larger bullish pattern is still valid on the higher time frames despite the recent crash towards the $16.40 level.
Silver medium-term price trend
The direction of trade for silver is slightly uncertain at the moment, as gold races towards multi-year highs while silver is settled above $17.00.
Silver is starting to test towards the $17.50 level, after trading in a massive price range between the $19.00 and $16.40 levels. Bulls have also recovered the price above silver’s 200-day moving average.
Silver technical analysis over the medium-term shows that a large bullish pattern is still valid, despite the recent breakout down move towards the $16.40 level.
The daily time frame clearly shows a large, and crucially valid, inverted head and shoulders pattern with over $5.00 of upside potential.
As long as the $14.00 level is defended the bullish structure of the pattern remains valid. A rally towards the $21.00 level would confirm an up move over the medium-term towards the $28.00.
Silver short-term price trend
Silver price analysis over the short term shows that bears are in control while price continues to trade above the $17.70 technical level.
The lower time frames currently show that last week's drop invalidated a bullish reversal that had been forming over the last few months.
A loss of the $16.50 level officially invalidated the bullish inverted head and shoulders pattern, which had close to over $3.00 in upside potential.
The short-term direction for silver may be confusing traders, as the price has recently made a fresh multi-month low and also a new multi-month high.
With this in mind, traders should expect sellers to test towards the bottom of the recent range to confirm a bottom, while gains above the $17.70 level may see traders testing to back towards the $19.00 level to confirm whether a top is in place.
Silver technical summary
Silver price technical analysis indicates that silver may trade in a large range between the $16.40 to $19.00 levels before the next major move occurs. The daily time frame continues to show a valid bullish pattern.