Silver’s Sideways Tension: A Breakout Could Spark Big Moves

By Tomasz Wisniewski|

Published: January 06 2025, 07:32 GMT+0

Silver’s Sideways Tension: A Breakout Could Spark Big Moves

Silver currently offers a captivating technical scenario with a mix of bearish and bullish potential. At the center of this analysis is a giant head and shoulders pattern, highlighted by a blue rectangle. This bearish structure has already led to a break of the neckline, marked with yellow. The neckline was retested multiple times as resistance at the end of 2024, and each retest resulted in further downswings, reinforcing the negative sentiment.

Currently, price action below the neckline has consolidated into a precise rectangle pattern, defined by red horizontal lines. This sideways movement has built up tension and sets the stage for a decisive breakout, which brings us to Monday’s European session.

The price is now testing the horizontal resistance at the top of the rectangle. A breakout to the upside, with an H4 candle closing above the red resistance and yellow neckline, would signal that the negative sentiment from the head and shoulders pattern has been invalidated. Such a breakout would generate an amazing buy signal, with the first target being the black downtrend line. However, the bullish potential doesn’t end there; a breakout could fuel a larger rally, possibly targeting much higher levels.

Conversely, failure to break this resistance and a subsequent move lower would confirm a continuation of bearish momentum. A drop would present a sell signal, with the potential target being the rectangle’s lower boundary. This scenario also offers an attractive risk-to-reward ratio for traders aiming to capitalize on further downside movement.

Silver’s technical position places it at a crossroads—either a powerful bullish reversal or a resumption of the prevailing downtrend. Keep a close eye on the price action around the key resistance and support levels as we begin the week.

Source: https://www.axiory.com/analytics/technical-analysis/silver-s-sideways-tension-a-breakout-could-spark-b

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