Silver price fails at dynamic resistance: here’s what the charts are signalling

Commodities have suffered from the US dollar’s strength in September. Precious metals are just one category that reflected the dollar’s strength, as both gold and silver prices have declined significantly.

Rising global yields led to strong demand for the world’s reserve currency. As such, the greenback strengthened across financial markets while stocks declined.

Silver has rallied since 2020, when it traded around $12. It more than doubled in price in less than a year but has struggled to break higher ever since.

$30 proves to be strong resistance – just as $2000 is strong resistance for the price of gold. However, the daily chart does not look that bad as it does in the first place.

Is it too late to buy silver?

In 2023, silver price declined to $20 before rallying again. It failed at $26, where it met dynamic resistance.

One can argue that the dynamic resistance is the neckline of an inverse head and shoulders pattern. If that is the case, the market just works its way, consolidating in the right shoulder, as it should do.

For the pattern to remain valid, silver needs to hold above the lowest point marked by the inverse head and shoulder. More precisely, silver needs to hold above $18 for bulls still to have a case.

If that happens and silver breaks above dynamic resistance, traders will take a chance at the pattern’s measured move that points to much higher levels.

Conclusion

A long entry is very risky at this moment. If contrarian traders would like to take a chance and buy the dip, the trade size should be as small as possible.

Silver should hold above the $18 level and return to dynamic resistance. A daily close above would signal more strength. For that, the dollar’s strength must reverse.