Weaker economic activity in the U.S. and growing expectations for the Federal Reserve to delay tightening has provided silver prices with a significant bullish move above the 200-day SMA. The current rally began off the August low of 13.91 and the current daily gain of 2.21% has the metal trading at 16.055.
Further upside may be upon us due to technical buying. The silver daily chart shows that price may find resistance from a bearish ABCD at the 16.10 level. Point D is targeted with the 161.8% Fibonacci expansion level of the B to C drop. The reversal pattern may be invalidated, because technical buying may remain strong and the reversal pattern typically does not like having a long-bodied candle to trigger the pattern.
If valid, we could see limited downside target the 15.50 region. Further weakness could target the 50-day SMA, which currently trades at the 14.855 level.
Silver prices may finally see a major bullish rally here and key upside resistance may come from the 17.775 level. Only a weekly close above here could open the door for a move towards psychological 20 handle.
The trade: Buy Silver at 15.50 with a stop loss at $14.50 and a take profit at $18.50 The Risk/Reward Ratio is almost 1: 3