Silver has just witnessed a rare false breakout in the May. A false breakout is when a market overcomes a defined level of selling pressure, only to fail to hold above that level following a period of consolidation. The result after a false breakout is often lower prices; however, context is key, as the market should only be expected to fall to the next visible support level.
In this article we will highlight silver’s recent false breakout, the expected support level it should decline toward, and the price trajectory pending following the summer low, said Christopher Aaron, iGold Advisor-providing independent research and analytics on all aspects of the precious metals markets, in his analysis for forecasting silver price in Silver Phoenix500.
In a takeaways, Christopher said, Silver has witnessed a false breakout above $24.00 in recent weeks. False breakouts tend to be forebearers for reversals lower.
However, context is key. While a false breakout after a multi-year advance would be the sign of a major top, a false breakout amidst a declining trend simply means a more moderate decline would be expected now toward the next visible support level. In the case of silver, the next clear zone of support is in the $20.90 – $21.00 region.
Following this low, silver may be on the verge of a powerful move higher, coinciding with gold’s breakout to new all-time highs.
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Investors should be using any weakness over the summer months to prepare for the likelihood of a major bottom in silver prior to a strong move higher in prices into 2024.
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