Silver recently surpassed $29.8, marking a new high from January 2021, but it encountered selling pressure at this level, leading to a pullback to $29.40. Despite this, silver does not appear to be overbought yet, with the RSI on daily timeframes just entering overbought territory. In the past month, silver experienced a three-week period of accumulation after the RSI crossed 70, followed by a two-week pullback in late April to reset the overbought conditions. This correction has set the stage for a potential upward movement.
The correction in April aligns with a classic Fibonacci pattern, with a retracement to 61.8% of the initial rally from late February, followed by a swift recovery. A clear break above recent highs will signal a continuation of the growth trend, with a possible target of $33 per ounce. The recent push towards the $30 level occurred just a month after the previous attempt, starting from a higher base compared to previous rallies in March or several years ago. Long-term trends also favor the bulls, as historical data shows quick recoveries above the 200-week moving average, indicating the potential for further upside.
Looking ahead, the current setup resembles the growth trajectory seen in 2010-2011, where a breakout above a multi-year resistance level at $20 led to a significant surge. The upcoming challenge will be crossing the $30 threshold by the end of the week to confirm the bullish sentiment. If this level is breached, it could open up the possibility of price targets exceeding $50 per ounce in the long term, echoing the peaks seen in 2011 and 1980.
This analysis suggests that silver may be on the cusp of a significant growth spurt, with potential milestones indicating further upside potential. While short-term fluctuations and profit-taking may create temporary setbacks, the overall trajectory remains bullish, pointing towards a possible resurgence in silver prices reminiscent of previous historical peaks. Investors and traders alike will be closely monitoring key levels and technical indicators to gauge the sustainability of this potential rally in the silver market.