Is The Silver Price Breakdown Official Now? These Charts Have The Story

silver

Did the silver price break down after the FOMC rate hike in June 2022?

We certainly did see the price struggle - it started even before the announcement, as silver was unable to clear resistance in the $22 area. But does that mean that the price has broken down? Not necessarily. Find out why in this article. As per our latest Trade Alerts weekend analysis, there is one super bullish data point in the silver market, one that is historically bullish.

Note that we have been following both the silver and gold price performance pretty closely both in our premium momentum trading service and our public domain.


Did the Silver Price Break Down in June 2022? Let’s Take a Look at the Charts

The last time we shared the weekly silver chart included below was on June 12, when silver was on the verge of a big move. At that time, we mentioned the following:

"There is, however, a reason to remain cautious in the chart below: the dotted trendline (2 touches so far, therefore not valid yet). That could turnout to be a double bottom with a higher high or a bear flag in the making.

"Should that bear flag materialize, we could see silver price trading at $19. That would be in line with the weekly support area highlighted above, so we see no damage there to the bullish setup in the silver price.

"If the price breaks below $19, that would invalidate the assessment above."

We indeed ended up back-testing that $19 area ($19.4, to be precise). So far, the support area did hold as buyers stepped in on Friday.

Silver’s monthly chart was the one exhibiting the most strength and respect of the pattern’s boundaries. This is changing now as we start the month of July. That last candle we see outside the flag is July’s candle. It’s too premature to draw conclusions from a single trading day’s candle, but it is concerning.

That candle is one that we will be closely monitoring. It could be a bear trap, but for that to be the case bulls would have to step up and bring the price back above $20 at minimum before July's end.

Below is the daily chart. We can see that there is one thing in common across all three timeframes: the silver price is in a horizontal support area. Therefore, the odds favor that support holds. It is not annotated on the monthly chart, but it is there nonetheless, exactly where the price bounced.

So did the silver price break down in June 2022? So far, partially, but silver’s price is sitting at a crucial support area that absolutely needs to hold. A quick recovery could invalidate the breakdown attempt, and this could qualify as a bear trap. We need a decline in the US dollar for this to occur.


Bonus Chart: Gold/Silver Ratio

From time to time, it is important to check on the gold/silver ratio. This ratio is simply an indicator of how undervalued silver is compared to gold. When this ratio tops, it may indicate that silver could start outperforming gold.

Which one will outperform is not necessarily the insight we are looking for here. However, we did notice that the ratio is hitting a resistance area. This might indicate a possible upwards move for silver, therefore corroborating the findings mentioned above. Silver is in a support area, and that support is likely to hold.

As indicated before, our bullish theory is invalidated if the price breaks below $19.

Make sure you check out our latest gold price update to see where we believe the price is heading. It also includes an update on the US dollar, with the closed weekly and monthly candle for June 2022 provided. Also, check out more charts and the bullish silver market data point in our latest Trade Alerts weekend analysis.

This text was written by hdcharting and reviewed by Taki Tsaklanos.

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