Silver Price Analysis: Silver threatens to reverse trend

• Silver price has recovered after meeting the conservative target for a Bear Flag pattern.
• It is now threatening to reverse the short-term downtrend and begin a new uptrend. 
• A break above the May 7 highs at $27.51 would probably signal a bullish reversal of trend. 

Silver (XAG/USD) price is threatening to reverse the short-term downtrend it has been in since April 12 and begin a new uptrend. This is significant given the old maxim that “the trend is your friend” since a reversal of the trend would indicate a switch to a bullish bias, favoring longs. 

4-hour Chart 

If Silver price breaks above the $27.53 May 7 highs it will probably increase the growing body of evidence that points to a reversal of the trend. Silver has risen strongly since it bottomed at the beginning of May; it has broken above the last higher low of the downtrend and breached both the 50 and 200 Simple Moving Averages (SMA). Bullish momentum has been strong during the up move. The MACD is now above the zero line and it formed a double bottom pattern during late April and May. When MACD forms a double bottom bullish reversal pattern it is often a sign the underlying asset price is also reversing. 

As such a break above the May 7 highs would probably usher in a new bullish trend and lead to a continuation higher to the next target at $27.74, followed by a target at around $28.80.  

Bear Flag reaches conservative target

Silver formed a Bear Flag continuation price pattern after reversing from the April highs at about $30.00. The pattern broke to the downside and declined to its conservative target. After a few bounces it started to reverse higher.  

There is a possibility that Silver price will fail to break above the May 7 highs and instead roll over. If so it will probably mean the short-term downtrend is still in force and the Bear Flag's second target could still be achieved. 

In such a scenario, Silver price will probably first fall to support at $26.10. Further weakness would probably lead to the next target to the downside at support from a long-term upper range boundary line at about $25.80. Yet more weakness could even see it reach the second target for the Bear Flag at $25.50.