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Silver Technical analysis – Price action consolidating at resistance level

The symmetrical relationship between gold and silver continues as Silver’s behavior is following the structure of gold. So far 2016 is a wild ride for precious metals, while other safe heaven assets such as Yen and Government bonds taking cues from the metals. Global economic, geopolitical uncertainties are influencing market sentiment and Investors appetite for risky assets. Price action is consolidating at resistance level $20.75.

Silver 4h chart for Price action trading

Silver testing technical analysis resistance level

1. After consecutive rallies, Silver formed a bearish rejection pattern. Price action translated into a range bound structure after the rejection pattern. Silver made high of the structure at 21.10. Rejection pattern is both tradable and analytical in context.

2. We can notice large quantity of shadows within the range bound structure. The size and similarity of shadows denotes higher average volatility in market place. Shadows also signify large number of liquidity traps on retail traders.

3. Systematic test at support level $19.50 for third time resulted in Wyckoffian spring setup. Springs usually happen when buying pressure defends or dominates the price action.

4. Price action is currently consolidating near the resistance level $20.75. Traders should observe resulting price behavior to gauge the strength of selling pressure. Also keep an eye on Gold to asses over all market sentiment of precious metals.

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