SLV unable to break through key resistance level
iShares Silver Trust (SLV) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
SLV finished Wednesday at 25.23 flat. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (SLV as at Sep 16, 2020):
Wednesday's trading range has been $0.54 (2.12%), that's slightly below the last trading month's daily average range of $0.69. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for SLV. Prices continued to consolidate within a tight trading range between 24.73 and 25.57 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Regardless of a strong opening the ETF closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on May 12th, SLV actually gained 0.90% on the following trading day.
The market managed to close back above the 20-day moving average at 25.21. Unable to break through the key technical resistance level at 25.48 (R1), SLV closed below it after spiking up to 25.54 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. After having been unable to move above 25.50 in the prior session, the ETF ran into sellers again around the same price level today, missing to move higher than 25.54.
Though the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might speed up should prices move above the nearby swing high at 25.57 where further buy stops could get activated. Selling might accelerate should prices move below the close-by swing low at 24.73 where further sell stops could get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R1" stand out. Its common bearish interpretation has been confirmed for SLV. Out of 380 times, SLV closed lower 56.58% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 56.32% with an average market move of -0.10%.