Despite silver trading within the lower zone of the regression channel, the chances of breaking to new multi-month highs are increasing.
Bulls could be attracted to the confluence level near the $18.50 area. There, the median trendline of the ascending channel and the TR1 trendline resistance starting in September ’19 meet.
However, prices could first retrace towards the lower channel and then move higher. The decline could form a false break outside the channel, near the 38.2% Fibonacci retracement of the bullish leg. Otherwise, further depreciation towards $16 could be seen.
The 1H chart below suggests that silver is trading with a bullish bias in the short-term too.
Struggling to get past the TR2 trendline resistance, a short-term pullback towards the 38.2% Fibonacci retracement of the short-term bullish leg can be expected. The RSI (14) supports this view as it shows a bearish divergence signal. However, bears will have to first break outside the lower channel.
In case bulls break TR2, we can expect the short-term median trendline to provide further clues.
If it will give in to bullish pressures we can expect a stronger attempt to take over the $18.50 confluence zone. If the TR2 median trendline holds, then traders can turn their attention to a potential retest of the TR2 trendline (now support).