Precious metals continued to consolidate in a relatively narrow range during last week's quiet holiday trading, reducing volatility in the sector for the time being. After the previous two weeks of harrowing losses and steep retracements, traders are watching for indications that the major swings may be signaling a long term bottom. Silver futures in particular have narrow into a tight range, as evidenced here on the Autochartist emerging patterns platform.
After briefly eclipsing key level resistance at the $30.00 per ounce level during the retracement phase of the sell-off, silver resumed its slide to retest the next major key level support levels just above $29.00 per ounce. So far this level has held the price, with the range-bound trade establishing a very choppy Descending Wedge chart pattern on the 30-minute time frame.

The Descending Wedge chart pattern is important to monitor in the week ahead for signs of near term direction. The lower trend line lies just beneath the lateral support levels, and may prove the last line of defense for buyers looking to pick the bottom of this pullback. The expectation for a test of this level remains high, as indicated by the strong Initial Trend reading by Autochartist A successful rally from the trend line would suggest that the market is basing at the $29.00 level for an eventual recovery. A failure to hold the bottom of the wedge would initiate yet another downside breakout and a potential liquidation into the $28 handle.

Overhead resistance provided by the wedge is resting at the $29.20 level. A rebound in silver to begin the week will likely find stiff support at this trend line, which may further narrow the range. A successful breakout above $29.30 should see momentum buying as well as short-covering to carry the price back above $30.00 once again. If the strength persists in the broader metals complex, such a move could confirm that the long term low is now in place for silver.
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