By Greg Holden – The price of precious metals, such as Gold and Silver, have been rising steadily for the past several months with what appears to be no end in sight. However, Silver is beginning to give off a few indications that it could correct downwards over the next few trading days and test its uptrend’s primary support level near the $24 mark.
The chart below is the Silver daily chart provided by ForexYard.
We can see on the chart that the uptrend has been confirmed multiple times and has sustained itself for months. The trend line drawn on the chart indicates where the price is likely to meet support.
As we can see, there is a recent doji candlestick formation from yesterday, and today appears on track to form a second doji candlestick. A doji is typically representative of an impending reversal in direction, however temporary the reversal may be.
The MACD and Stochastic (slow), shown at the bottom of the chart, each have fresh bearish crosses, suggesting an imminent downward corrective movement has begun to develop.
The first support level to be tested will be reached at the $24.50 price level, and represents contact with the trend line.
If the price of Silver behaves similar to other commodities, such as Crude Oil, we could see a minor breach of the trend line as the pair forms either a flag or pennant consolidation trend over the next few weeks. If the price reaches $24 an ounce, this may well be the case.
