Is The Silver Market Breaking Out?

The short answer is 'yes, silver is in a breakout process, and it might be preparing a move to our predicted price target of $34.70 provided it clears $28'

(April 2, 2024 - Taki Tsaklanos, Investing Haven)

Silver is working on a breakout. In fact, silver is very close to a breakout. If silver rises above 26.50 USD/oz, and stays there for 5 to 8 consecutive days, silver’s breakout will be confirmed.

After a really consolidation, the time has come for silver.

While the silver breakout is not confirmed, not yet, the silver setups look truly awesome.

In this article, we don’t look at fundamentals because we discussed them extensively in the past in our silver prediction as well as the detailed silver squeeze analysis. We focus on silver charts in this article.

Silver completing a bullish basing pattern

One of the most powerful chart structures is the bullish basing pattern.

In essence, a bullish basing pattern is a long consolidation in which key support levels are respected. The consolidation is orderly, it occurs after a big rise. The longer the consolidation, the higher the upside potential.

Silver’s basing pattern has all of those characteristics:

• A big rise in the period June/July of 2020.
• A long consolidation since August of 2020.
• Key support levels around 20 USD/oz were respected.
• The only ‘violation’ of key support occurred late summer 2022. As seen on the chart, this ‘violation’ morphed into a series of 3 bullish micro-patterns, right below 20 USD/oz.

The daily silver price chart has a very bullish looking. It requires a small rise to start an epic breakout.

Silver breakout on the daily chart

The above chart, without annotations, helped us understand that silver’s price chart has a bullish setup. The setup may push silver into a breakout.

Below is the same silver daily price chart, but with two annotations:

1. The falling trendline since the 2021 top – as seen, silver is now for several consecutive days above the falling trendline – in a way, this is a breakout.
2. The reversal structure since April of 2022 – as seen, the reversal structure, the green shaded area, is now complete.

If we combine both ‘chart events’, we can conclude that silver has broken out of its downtrend. However, for the silver breakout to be confirmed, silver needs to move a little higher, and stay there.

It is fair to say that silver’s breakout will be confirmed once silver rises above 26.20 USD/oz, and stays there for 5 to 8 consecutive days.

Secular silver breakout on the weekly chart

Now let’s turn to the weekly silver price chart.

The annotations on this chart are important – the Fibonacci retracement level that truly matters is the 50% retracement level which comes in around 24.50 USD/oz.

As seen, silver moved above the falling trendline which connects the 2011 peak with the highs since 2020. Moreover, silver is now above its 50% retracement level. What is truly unique is that silver is now above both patterns on its secular chart – this has not happened before.

What does this mean? On the secular timeframe, silver’s breakout is happening now. However, as this is a weekly chart, we need a few weekly candles above 26 USD/oz to confirm the secular breakout.

Conclusion – Silver breakout happening now

If we combine the silver breakout insights, from the daily and weekly timeframes, we conclude:

• The breakout point on both timeframes is the same – 26 USD/oz.
• Silver’s breakout on the daily timeframe is happening now – silver’s breakout will be confirmed once silver rises above 26.20 USD/oz, and stays there for 5 to 8 consecutive days.
• Silver’s secular breakout on its weekly chart is happening now – silver needs a few weekly candles above 26 USD/oz to confirm the secular breakout.

In other words, silver’s breakout is happening on two distinct timeframes. It is the first time that the breakout level on both timeframes are identical. It is also the first time that the falling trendlines, from silver’s 2011 peak and its 2020 peak, on both timeframes, are cleared (to the upside).

Silver’s chart setup has everything to quality as a breakout.

Silver needs some follow through now – April 2024 might be a big month for silver.