Silver, copper teetering: Bearish breakouts looming?

Silver breaks pennant support; $30.80 key for further downside
Copper stalls near $4.176; bear flag warns of resumption of bear trend
Mixed momentum signals; MACD lags RSI (14) on both metals

Overview

Silver and copper prices have stabilised this week after a prolonged bout of weakness. However, sitting in what looks to be bear pennant pattens, whether this period of tranquillity can last is debatable. Given the quiet macro calendar, we look at that price and momentum signals for clues on what may happen next.

Silver slices support; bear trend resuming?

Source: Trading View

Silver may already be in the process of resuming its downtrend with the price breaking pennant support following a decent reversal on Wednesday. The move, coming despite big gains in gold, makes sense in the context of the shooting star candle that printed on Tuesday.

While some may be willing to short now in anticipation of a resumption of the bearish trend, I’d prefer to see whether the price can break and hold below $30.80 first. It’s acted as both support and resistance on multiple occasions in recent weeks, making it a near-term barrier in the way of downside.

If $30.80 were to give way, you could sell with a tight stop above targeting a return to $29.66, another level that has acted as support and resistance earlier in the year. The fact the price bounced so aggressively from it last week underlines its importance.

Momentum indicators are providing mixed messages near-term; RSI (14) is trying to break through the downtrend it’s been sitting in, although MACD has yet to confirm the signal

If the price were unable to break $30.80, the setup should be scrapped in favour of range trading or a possible push higher.

Copper’s bounce accompanied by dwindling volumes

Source: Trading View

Copper also looks to be trading in a bear flag, although it’s yet to break support. Like silver, momentum indicators are providing mixed messages with RSI (14) through its downtrend without being confirmed by MACD. However, volumes accompanying the bounce have been dwindling – not a great sign for those looking for a sustained push higher.

Overhead, the price has been rejected twice at $4.176 over the past two sessions, hinting we may be due some downside near-term. If pennant support were to be broken, you could sell with a tight stop above for protection. $4 would be an obvious trade target.

If the price were to break and hold above $4.176, the bearish bias would be nixed, opening the way for bullish setups.

-- Written by David Scutt

Follow David on Twitter @scutty

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.