A successful break of this resistance on a dual weekly close should see the commodity begin a dynamic advancing trend lasting into the middle of the decade. However, a failure to overcome resistance signifies that silver will be caught in another deflationary period similar to the Coronavirus panic of February – March 2020.
Silver’s Primary Trend
Silver remains in a primary declining channel (blue), which began in December 2015. The red arrows show the five times that sellers appeared along the declining resistance boundary (upper blue line), and the five times that buyers showed up along the declining support boundary (lower blue line).
Silver is presently making its sixth distinct attempt to overcome this declining trend of sellers. The figure which must be broken is $18.60 in the spot market, on a dual weekly close.
Should silver successfully register this dual weekly close, we will look for an immediate surge toward $21.25, to match the 2016 peak. Following, a retracement toward $18.60 – $19.00 to retest the broken declining trend will be expected.
Upon a successful retest, silver would enter a new bull market over the next 2 – 5 years, eventually to challenge the former all-time high at $50.
However, should silver fail to exceed $18.60 for a dual weekly close, such will indicate that deflation has gripped the commodity sector again, thus pulling silver down with it. Moderate support would then be seen at $14.00, followed by $11.50 near the recent March 2020 lows.
Silver and Deflation
Those who do not believe silver will get caught in another round of deflation would be wise to study the metal’s recent strong correlation with the S&P 500 stock index. Note the similar percentage declines during the Coronavirus panic, and the similar recovery patters, with slight outperformance by silver within the last few weeks:
Takeaway on Silver
Silver has major multi-year resistance ahead at $18.60. A dual weekly close above this figure signifies the end of the last major downtrend for silver’s bear market which began in 2011. However, a failure to overcome this figure signifies silver will get caught in another round of deflation over the months ahead as it did during the Coronavirus panic.
In our work at GoldAdvisor.com we are preparing to capture the pending move in silver through leveraged trades and investments in the silver mining sector. Investors should watch the $18.60 figure closely over the weeks ahead and plan wisely.