Resistance Reference Barrier to Watch in Silver SLV

Feb 9, 2012: 9:32 PM CST

Silver (and its popular ETF SLV) face a major resistance barrier overhead which should be watched closely.

Let’s update the current Daily Chart of Silver and SLV to note this key price level to watch as a reference.

Let’s focus most of our attention on the overhead resistance cluster at the $35.00 per ounce level.

On the chart above, we see three major indicators wrapping around the $35.00 area:

  • The larger 38.2% Fibonacci Retracement (whole move)
  • The smaller 50.05% Fibonacci Retracement (from August high)
  • The falling 200 day Simple Moving Average

We can also add in a “Price Polarity” level from the November high and mid-2011 lows.

Does this level guarantee that price will turn and reverse lower?

No, absolutely not, but it will be a level many traders will watch and likely react depending on what happens.

In general, Silver (and SLV below) breaks resistance into bullish territory above the $35.00 level and else remains cautious underneath it.

There’s similar EMA and Fibonacci levels to watch underneath price as support at the $33.00 level.  A breakdown there would trigger (or confirm) a bearish bias into the Sell Zone.

Here’s the same style chart for the companion trading fund SLV:

While structure is the same, the key barrier level to watch will be $34.00 in SLV.

Price become bullish for a breakout (Green Zone) above $34, develops a sell bias under $32 (Red Zone) and otherwise is neutral/cautious between these areas.

For reference, a firm breakthrough above this resistance area will trigger the start of a Trend Reversal, particularly on a movement back above the falling 200d SMA.

As traders, we must be as objective as possible and rely on key price reference levels to guide our trading decisions.

These levels appear clearly on the chart structure at the moment in Silver (SLV).

Corey Rosenbloom, CMT
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3 Responses to “Resistance Reference Barrier to Watch in Silver SLV”

  1. Borderlinefutures Says:

    It looks like silver is having a short-term price divergence against the MACD along the top that last high during the last week of january and february so far. I wonder what the short and long term futures are for gold and silver. The boss of Goldcorp recently announced publicly that gold would top $5000. People have been throwing that number out for the last several years. However, it seems to me that gold and silver are both in for a short term correction. Who knows, maybe not so short term… I guess we'll see.

  2. Pascal Says:

    Very good and interesting analysis.
    Pascal from Paris (France)

  3. Borderlinefutures Says:

    To add to this, I wanted to point out that the major US stock indexes (S&P 500, Nasdaq, DJIA) are showing similiar signs are gold and silver. Their MACD upwards momentum seems to be running out of steam and some divergences are becoming apparent between price and MACD (either in the histogram or the moving averages). In addition, the USDX (US dollar index) is looking like it might just be ready for an upwards direction, even it's just in the short term. It's described more thoroughly here:
    http://www.futures-trading-inf…. I wonder what will happen next week. I wonder what “hidden news” the markets are warning us is coming our way… :S