Silver futures crept higher last week to complete a retracement back to a long term key resistance level. Autochartist has introduced Key Level pattern identification into its automated platform this week, illustrating the horizontal resistance level on the silver chart is coinciding with Friday's closing price near $34.70 per ounce.
In addition to the current consolidation area marking a key resistance level, the swing high also completed the most recent leg of a Channel Up chart pattern, shown here on the 30-minute time interval. This makes the $34.70 price level a convergence point, where resistance levels from two different patterns overlap at the point where the price has rapidly lost upward momentum.
Typically this proves to be an area to watch for a possible retracement to a lower level. As selling pressure confirms the resistance, momentum may accelerate to the downside for a retest of the Channel Up support near $34.00 per ounce.
The retracement to the bottom of the Channel Up chart pattern would confirm the key level resistance remains intact and open up a trading range between the $34.00 and $35.00 per ounce level as the market seeks long term direction. A close below the trend line support at $34.00 could generate a downside breakout with a move lower anticipated in the longer term.
If the current rally does push higher through the dual resistance area on the chart, this would indicate new buying strength entering the market. A move above $35.30 per ounce would signal a potential acceleration of the trend for an upside breakout, with a substantial move above the key level possible.
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