Reversal Pattern in Silver at the Top of a Descending Channel

Market Overview

Silver faces sustained downward pressure due to a combination of factors, including the strengthening US dollar, reduced industrial demand, and evolving interest rate expectations. The Biden administration’s diminished focus on renewable energy has tempered the previously rising demand for silver as an industrial commodity. Additionally, the recent rally in the dollar, driven by robust US economic data, has further exacerbated selling pressure on this precious metal.

Technical Analysis

On the 4-hour chart, silver is testing the upper boundary of its descending channel near the 31.012 resistance level. Sellers have stepped in, aiming to maintain control and extend the downward momentum below the recent support at 30.084. The formation of a double-top reversal pattern, coupled with the break of a short-term ascending trendline, underscores the potential exhaustion of the prior bullish rally.

If selling pressure persists, silver is likely to test the immediate support level at 29.832. A decisive break below this key level would expose subsequent downside targets at 29.510 and 29.156, aligning with lower levels within the descending channel.

Momentum oscillators confirm the bearish sentiment, with the RSI retreating from overbought territory and MACD reflecting increased downside momentum.

Conversely, for buyers to regain control, they must overcome the 30.438 resistance level and ultimately break above the 31.012 high. This move would invalidate the bearish scenario and potentially trigger a breakout from the descending channel, opening the path for further gains.

Key Technical Levels

• Resistance Levels: 30.084, 30.438, 31.012
• Support Levels: 29.832, 29.510, 29.156

Fundamental Factors

Silver’s bearish outlook is compounded by the US dollar’s strength, which has been buoyed by expectations of sustained economic resilience and rising interest rates. Today’s release of durable goods orders, consumer confidence data, and the Atlanta Fed’s GDP forecast will be closely monitored for signs of economic strength. Robust data could further bolster the dollar, exerting additional downward pressure on non-yielding assets like precious metals.

Furthermore, the Biden administration’s focus on other policy priorities, rather than renewable energy, has diminished the industrial demand outlook for silver. This shift, combined with ongoing concerns over global economic growth, has tempered the metal’s appeal.

Conclusion

Silver remains under bearish control, with sellers targeting a break below 29.832 to confirm further downside. The metal’s recovery hinges on its ability to breach the 31.012 resistance level, a move that would invalidate the current bearish scenario.

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