Silver (XAG/USD) continued its impressive rally, breaking through the $40.76 level and extending its upward momentum. However, the precious metal is now approaching a significant resistance zone between $41.00 and $41.65, where key Fibonacci levels converge, presenting a crucial test for the bulls.
Silver’s Bullish Momentum: A Breakout Beyond Trend Channels
Silver prices surged to a fresh trend high of $40.76, a remarkable achievement, during Monday’s truncated futures trading session due to the U.S. Labor Day holiday. The breakout exceeded last week’s high of $39.97, confirming that bullish momentum remains intact for silver. This rally also saw silver surpass the upper boundary of a large ascending trend channel that had previously acted as resistance.
If the early-week gains hold, the uptrend, supported by the 50-day moving average (MA) at $37.80 and the rising 20-day MA at $38.39, could continue to steer the price higher. These supportive moving averages suggest that silver is well-positioned for further upside, but caution is warranted as the metal approaches key resistance levels.
Approaching Key Resistance: Fibonacci Levels at Play
Despite silver’s impressive gains, the metal now faces a confluence of significant resistance levels that could potentially test bullish momentum. The resistance zone, stretching between $40.86 and $41.09, encompasses:
- The 200% extension of a recent bearish correction
- The 127.2% Fibonacci extension of the 2021 decline
- The 161.8% projection of a short-term rising ABCD pattern
These levels represent a crucial pivot zone, and if silver fails to break through or consolidate above this area, it could experience a temporary pullback or consolidation before attempting to move higher.
Long-Term Outlook: A Major Barrier at $41.65
Should silver manage to break past the immediate resistance, the next long-term barrier lies at $41.65. This level is the 78.6% Fibonacci retracement from the full decline since the 2011 peak of $49.81. A decisive breakout and sustained close above this threshold would strengthen the long-term bullish outlook, opening the door for a potential retest of the 2011 record high of $49.81.
Until silver clears this key level, traders should expect resistance and possible corrective price action. A pullback here is natural, but the overall long-term trend remains bullish, and demand remains high.
Short-Term Outlook: Overextended but Still Bullish
From a short-term perspective, silver’s surge may appear slightly overextended, raising the probability of a pullback or consolidation before further upside. However, the broader trend structure remains firmly bullish. August closed near its highs and above July’s peak at $39.53, signaling a confirmed monthly breakout and reinforcing the positive momentum for silver.
Conclusion: Silver’s Immediate Challenge at $41.00–$41.65
Silver remains technically strong, but its immediate challenge lies in navigating the resistance zone around $41.00–$41.65. A sustained break above these levels would signal continued strength and increase confidence in a long-term bull market. If silver consolidates or faces a short-term pullback, the next potential support levels to watch are the 20-day and 50-day moving averages, which will provide key support zones for any corrective action.
As silver approaches critical resistance, traders should monitor the price action closely. The next few days could determine whether silver maintains its bullish momentum or pauses for consolidation before breaking new ground.
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