It has been a fun time for precious metal investors and bulls. In fact, many commodities have been on a rip. Coffee and cocoa have been ripping. Canola had a nice pop last month. Those who follow my work here at Equity Guru know about the inverse head and shoulders pattern we have been calling on oil. It has triggered and let’s just say, will likely impact future inflation data. And the metals:
Boom.
Gold is getting a lot of attention because of the all time record highs, but all metals are looking good.
Platinum and Palladium look bullish with reversal patterns triggering. The inverse head and shoulders pattern on palladium. And you have a double bottom with an inverse head and shoulders market structure on platinum. These metals are just starting their new uptrend.
Copper is also on a rip. Very interesting. Copper is known as Dr Copper and generally is used to gauge the health of the global economy. US data has been positive thus far indicating a resilient economy. But copper tends to move on China demand. Perhaps the markets are pricing in a better economy. Rising oil prices could be benefitting from this as well. Or just a move due to supply and demand imbalances.
But let’s talk about one of my favorite metals. Silver.
We start off on the weekly chart. Each candle represents one week of price action.
First things first. A few weeks ago, we had a trendline breakout. This breakout was confirmed in the week of March 11th 2024, and then the retest saw buyers jump in two weeks after. Technically the weekly higher low comes in at $24.
Many of you have noticed the other resistance zone which broke. The $25.50 zone has been holding as resistance since August 2021. Silver has confirmed a close above this level indicating a strong and critical breakout.
Things are bullish my silver fiends.
Going forward, the $25.50 zone becomes major support. On the weekly chart, we could see a pullback down to this zone before continuing higher.
When could this pullback begin? Well perhaps soon given the fact silver is at a major resistance zone. This is where many traders have targeted for taking profits. And for good reason.
Look to the left, and you can see this $28 zone has been resistance going back to 2020.
If silver instead breaks and confirms a weekly candle close above $28, then we set up another major breakout with bullish momentum.
Going down to the daily chart, and we can see today’s candle is currently a doji. This is indicating a battle between the bulls and the bears and it is happening at our major resistance zone. Now this one candle is not a sell signal, but it confirms that this zone will see a major battle and important price action.
On the daily chart, the higher low comes in at $26.85.
Going down to the intraday 1 hour chart, and you can see the battle going on at this zone more clearly. An uptrend line has been broken and the day traders will definitely be paying attention to this.
The 5 minute intraday chart also shows the selling which followed on the test of resistance.
In summary, silver is at a major resistance zone and a pullback is likely. However, the bullish uptrend remains intact as long as silver stays above the $25.50 zone. I will be playing the pullbacks.
Before you close this article, I want to let you know that there is a MAJOR catalyst coming tomorrow (March 10th 2024) which will impact gold and silver and most markets. We get the inflation data (CPI) for the month of March 2024 in the US. A surprise would adjust interest rate cut expectations and probabilities and will impact the US Dollar… which would then affect the precious metals. Keep an eye on this as tomorrow’s data could lead to a stronger rejection signal at this resistance zone.
On the other hand, if data shows that inflation has come lower than expected, the markets may very well celebrate the news. This would see silver break above the $28 resistance zone.
Happy trading.