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Silver breaks below Falling Wedge – fakeout or lower lows to come? $SILVER

There was a sharp pullback in silver during the past hour, with the price breaking below a well established Falling Wedge pattern. The Falling Wedge is usually a bullish pattern, with price action breaking upward more often than not. It is not game over yet for silver bulls though, since the sharp move could still prove to be a fakeout. A daily close back in the Falling Wedge, above $1470 (July Futures) will maintain the integrity of the pattern. A subsequent successful break upward out of the wedge, currently around $1509, would open up a potential target of $1600 and would see the precious metal move back above its 200 Day Moving Average (DMA).

Silver Futures Daily Chart

It is also worth nothing that the gold/silver ratio is testing decade long highs. The ratio adds further weight to the premise that silver has some considerable ground to make up relative to gold. With sentiment for gold remaining generally bullish, it seems likely the pair will move in unison, but the high ratio does suggest Silver could enjoy a stronger move at some point.

Gold/Silver Ratio Weekly Chart

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  • Stuart Langelaan currently holds a position or positions in the stock(s) and/or financial instrument(s) mentioned in the piece.
  • Stuart Langelaan has not been paid to produce this piece by the company or companies mentioned above.
  • Dynamic Investor Relations Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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