The outlook for silver is rather bearish. However, there are a few key price levels to be aware of especially as the price is testing one of those levels now. The weekly and monthly time frames outline several of these levels quite nicely. Starting off in this multi-time frame analysis, the monthly time frame shows a resistance turned support level.
The current level that is being tested dates back to February of 2009 as well as February of 2010. What is the significance of February? This could just be a pattern by fluke. Nevertheless, this month was obtained by scrolling over to the historical daily time frame.
More specifically, this resistance turned support level is priced at $14.60~, which will take another 110~ pip fall from the current price level to reach. Perhaps this will take place in February of this year.
It would be interesting to see how the price plays out at this level. Keep in mind that when the price last touched the 14.60~ level in February, 2010, it rallied up to high 49.90~. This required quite a bit of zooming out, but nevertheless successfully captured below.
Judging by this, this is a key turn around point. Of course, there is no way of knowing if it will hold until the price tests this area once again. While this is just one of the critical price levels, there are two more to watch out for displayed better on the weekly time frames.
Weekly time frame reveals two more price levels. As shown, price is testing one of these levels now. There was an initial bounce on November 14 of this year followed by a quick retrace back to this zone on the 28th. Another bounce on the 29th posted a new fractal high. While the price has retraced once again in the previous week of December, it is also crucial to see if a lower low fractal is generated. If a lower low fractal fails to produce, it is possible that this price level will hold with a bullish outlook in the new year.
Zooming in to the daily does not reveal much trading activity. Indicator wise, the stochastic hints at a divergence. This will take some time to play out.
In the meantime, there is a second possible supply level at 13.30~ shown on the weekly on the chart above the latest. Silver is still looking bearish following the monthly breakout patterns.
The first wedge formation topped out at 34.26~ and consolidated near the bottom at 26.13~. This 8.00~ difference produced a breakout move of 8.00~ down to 18.08~ before another wedge consolidation. This second wedge formation began at 23.40~ and bottomed out close to 18.70~. This difference of of 5.00~ would suggest a breakout move down to at least 14.00~ putting the second price level to the third price level to the test.
