Silver continues trading inside of a large Channel Down chart pattern as gold sets record highs in Tuesday's trading session, raising the question of whether an upside breakout is in the works. Several retests of resistance so far this week have met minor selling pressure to leave silver in the middle of the channel near $38.00 per ounce.
With harrowing volatility across the commodities sector, silver has remained relatively stable inside the channel, and may be more inclined to adhere to a technical formation in the current environment than other markets reacting sharply to moves in other markets.
A move above the resistance at $38.50 would signal an upside breakout, which may initiate a speculative rally towards the previous high near $50 per ounce to chase gold's stellar performance. Conversely, a breach of the Channel Down chart pattern support at $37.00 would be exceedingly bearish given the overall strength in the metals sector, and open the door to a major downside correction. Meanwhile, range trading inside the channel with the current price action could allow for numerous short term trading entries.
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