The price on the daily Silver price action chart has been stuck in a tight consolidation period for over two months now after being smashed lower. Like a lot of the other commodities such as Oil and Gold, in recent times Silver has been in a heavy down trend with the price being heavily discounted and sold off on the daily chart.
As the daily chart shows below; price looks to have formed a base for the time being. Price very rarely will change a trend by just turning around on the spot. Price will not normally change a trend by just forming one rejection candle and then the whole market turns around. What will normally happen is that price will take time to roll over. Price will often make multiple attempts at trying to continue the strong trend before a potential new trend starts up.
With this market as the daily chart shows below; we can see that price made the first attempt to reverse higher. As I just said, normally there is not enough strength in the first move and price will have another crack at trying to continue the trend and as we can see with this market, price tried to continue the trend lower. This is where we can start to see a base forming and a potential for a possible reversal.
We now need to see price breakout and most importantly close out above the major daily resistance level. As I discuss in the trading lesson; The Secrets Traders Can Learn From Candlesticks and Price Action the close out and above the resistance is crucial and then traders will need to watch the price action to ensure that price stays above this level. If price can breakout higher, then traders could look for potential long trades on their intraday time frames for setups such as breakout and retrace trades with price breaking out higher and making a quick retrace back into the old resistance/new support.
If price moves back lower, then the lows and the support where the base has been set up become crucial because if these get taken out, then the next large move lower could be on the cards inline with the trend.
Silver Daily Chart
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