Silver Price Forecast: Inside Day Sets Stage for Potential Breakout

Silver pulled back a bit on Monday from its rally high of 31.49 reached last Friday. It is on track to complete an inside day today as trading is contained within Friday’s price range. Last week’s bullish reversal in the weekly time frame set the stage for a continuation higher. A rest day following last week’s advance to a seven-week closing high is normal and healthy for the developing advance. It should lead to a new setup for a bullish continuation of the trend.

Inside Day Breakout Setting Up

An aggressive bull signal will be given on a decisive rally above today’s high of 31.37. That will trigger an inside day breakout. It reflects a breakout from a consolidation pattern on the daily time frame. Therefore, traders will be watching for strong upside follow through if the signal is triggered. If that doesn’t happen, the breakout is subject to failure.

Downside Price Levels

On the downside, near-term support is at today’s low of 30.44. If it fails to maintain support, Friday’s low of 30.13 is next in line. If broken to the downside, natural gas could fall to test support around the bullish breakout area around 29.70 that was triggered last Wednesday. That price area is supported by the 20-Day MA at 29.69 and the 50-Day MA at 29.58.

Next Target Above Trend High is 33.17

A decisive rally above today’s high could be the beginning of an upside continuation set to challenge the interim swing of 31.55. That is the next higher price level on the agenda. Once there is a daily close above 31.55, silver should then be ready to again approach the 32.52 trend high from early-May and will likely break above it. A basic extended retracement target for silver is 33.17. That price level completes a 127.2% Fibonacci extended retracement of the most recent bearish pullback. In other words, a 100% retracement will complete at the most recent swing high of 32.52.

So far, trading in July has been contained within June’s trading range. But last month’s high of 31.55 will likely be challenged as resistance before this month is over, with an upside monthly breakout a likely resolution. This puts greater weight on the behavior of silver relative to the 31.55 price level mentioned earlier.

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