Silver Price Analysis: Silver continues battling higher within descending channel

• Silver is recovering within a falling channel. 
• It has met tough resistance at the level of the 50 and 100-period SMAs on the 4-hour chart. 
• There are bullish signs but a breakout of the channel would be a prerequisite for a more confident stance.

Silver (XAG/USD) continues recovering within a descending channel. The precious metal found support at the June 26 and 13 lows (around 26.88). Its first attempt to break above the cluster of Moving Averages in the mid $29.40s failed but after its pullback on July 1 it has started creeping higher again.  

Silver 4-hour Chart 

It is now debatable whether Silver is still in a bearish short-term trend, which means there is no longer a downside bias. However, it is in a falling channel which does add a bearish tone to the charts. 

Therefore, if price falls back below $28.57, the June 26 low, it would reconfirm the downside bias, with the next target lying at the lower channel line, at around $27.50. 

If Silver continues recovering and breaks on a closing basis above the 50 and 100 SMAs, however, it would indicate a continuation higher to the upper channel line at around $29.90. This would be a critical crossroads for the pair. It is also a major resistance level at the top of a four-year consolidation zone. A decisive break above would indicate the start of a new short-term uptrend. 

A decisive break would be one accompanied by a long green up candle that broke clearly above the level and closed near its high or three green candles in a row that broke above the level. 

Silver temporarily broke out of the top of the falling channel on June 20, and although it quickly fell back, the fact it breached the integrity of the channel, albeit temporarily, indicates the upper channel line has been weakened and is more likely to give way again. This also adds a slightly bullish note to the charts. 

The rally during the start of May also gives the chart a further bullish aspect. One view could suggest this rally was a wave “A” and the whole of the falling channel is the second large wave, or wave “B”, of a Measured Move (MM) pattern higher. MMs are three-wave zig-zags. If so, this could indicate a move of a similar length could unfold to the upside, in a wave “C”. Such a move, if it materializes – and it’s too early to say yet – would probably take Silver up to around the $33.00 mark.