Is silver finally going to break out? The answer is that the probability is increasing with each passing day, as long as 27.60 USD is respected. A breakout will be big, as this will open the door for a move to the mid 30-ies as a first target. This would be exactly in line with our silver forecast 2021.
In our silver post published exactly one week ago When Will Silver Clear 30 USD we mentioned the 3 important levels that silver is now taking out (or, better, attempting to take out):
- Short term rising trend that started in the first week of April (see red rising trendline).
- Longer term falling trend that started in the first week of August (see red falling trendline).
- Horizontal retracement level (see red/grey shaded area).
One week later we can only observe that the picture in silver has improved. And as long as silver trades above 28 USD it is solidifying its setup and increasing the probability to confirm its breakout.
The daily chart since last July shows a consolidation, one that most investors would prefer to ignore. Not so over here, we like this setup a lot. The one most important price point we derive from this chart is the 27.20 – 27.60 USD level. That’s the horizontal line shown on below chart, and it marks the start of the 8 month reversal pattern (see the big red candle of mid-September).
We were pleasantly surprised to see a solid price action in silver last week, and truly believe there is a high probability that this will continue next week. The one and only level to watch, in our view, is the 27.20 – 27.60 USD level on a 3 day closing basis.
Whenever we have 3 to 5 daily closes above 28 USD we believe silver will be ready to move to the mid 30-ies, as a first price target. This may happen in June already.