Silver Reaches Key Resistance at Important Moving Average

Silver have received a big push higher as November comes to a close.

Bullion.Directory precious metals analysis 25 November, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

Silver has bounced from its four-year low, after what was looking like an outright calamity in the silver market. Silver was a mere six cents from seeing a 14-handle on prices, but demand has increased coming into the last week of November. A series of global economic data disappointments, as well as language out of the European Central Bank (ECB) has been bullish for precious metals. China’s first rate cut in two years, announced on Friday, gave both gold and silver a boost.

On a technical basis, silver has reached a key intraday resistance level on the 4H chart – the 200 EMA. Currently, price action has been subdued with the last four approaches have been rejected. This resistance point has “supportive” resistance in the form of a descending trend line that began October 15.

A close above these key resistance points could offer a quick pop in silver prices. The nearest target would be price resistance found at $16.65 and a secondary target of $16.85 per toz.

Target one is found within a symmetrical ascending triangle, where price action could begin to consolidate. Look for a breakout for target two. However, if key resistance is upheld again, silver could trend to support $16.37 and, potentially, $16.21, which the 50 EMA can be found.

Silver has some headline risk this week, as the second reading for US Q3 GDP figure will be out today and consumer sentiment out tomorrow. The results of the Swiss gold referendum could increase volatility, too.

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