Silver prices are down more than 10% off the September highs with XAG/USD trading in a wide range just below a critical resistance level we’ve been tracking for months now. These are the updated targets and invalidation levels that matter on the Silver weekly price chart. 

SILVER PRICE CHART – XAG/USD WEEKLY

Chart Prepared by Michael Boutros, Technical Strategist; Silver on Tradingview

Notes: In my last Silver Price Outlook we noted that XAG/USD was “testing uptrend resistance around 18.37/65 - a breach/close above this region is needed to keep the broader long-bias viable… look for evidence of price exhaustion up here.” Price registered a high at 19.64 in the following days but was unable to mark a weekly close above the 18.37/65 resistance zone- a region defined by the 61.8% retracement of the 2016 decline and the 2017 swing-high.

The technicals are messy here but for now, the focus is on two main zones of support at 16.97 and more importantly 16.33/51 – both levels of interest for possible exhaustion / long-entries IF reached. A topside breach/close above 18.65 is needed to mark resumption with such a scenario again targeting the upper parallel / 78.6% retracement at 19.58.

Bottom line: Silver remains in correction off uptrend resistance and while the broader focus is higher, we’re looking for another low here before resumption. From a trading standpoint, the focus is on possible exhaustion on a move towards the lower parallels / ahead of 16.33 for entries. Ultimately a topside breach/close above 18.64 is needed to fuel the next leg higher.

SILVER TRADER SENTIMENT – XAG/USD PRICE CHART

(Click on image to enlarge)

• A summary of IG Client Sentiment shows traders are net-long Silver - the ratio stands at +5.79 (85.3% of traders are long) – bearish reading
• Long positions are0.5% higher than yesterday and 6.8% lower from last week
• Short positions are 9.7% higher than yesterday and 26.1% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Silver prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week and the recent changes in sentiment warn that the current Spot Silver price trend may soon reverse higher despite the fact traders remain net-long.