Rising Support Levels Reinforce Uptrend Strength
Although the risk of a parabolic advance that leads to a blow off top is rising, upward progress is constructive so far. Respect for key support levels will further confirm demand seen in the trend. Given today’s breakout, last week’s higher low of $80.31 is key lower support based on structure. For the short term, the 10-day moving average at $85.88 and rising provides significant dynamic support, along with a rising trendline. In the slightly bigger picture, the 20-day average at $79.35 is key. A failure of the 20-day average would first be needed before there were signs of a larger potential correction.
Bull Pennant Breakout Signals Trend Continuation
Notice that the 10-day line has been clear dynamic support since it was last reclaimed in late-November, leading to price acceleration. During the rise it was successfully tested as support several times, including recently. Prior to the decisive breakout of a bull pennant last week, silver bounced off support near the 10-day average. That was the last time it was touched as bullish momentum subsequently improved.
Measured-Move Targets Highlight Further Upside Potential
The bull pennant breakout provided a classic trend continuation signal that was confirmed by a new closing trend high. It began a new leg up in the trend. To get a rough estimate of where silver could be heading, a measuring objective is calculated by taking the distance from the November 28 new high breakout at $54.49 to the top of the pennant at $84.03, then adding that distance to the pennant trigger of $82.77.
When measuring price, that calculates to around $112.32, and when looking at percentage change, the upside potential target is $127.63. The point is that there is potential upside for silver based on the trend pattern. Whether those measured moves are reach or not, they suggest continued strong demand from buyers.
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