Silver Primed for 7% Rally: $40.90 Target in Sight
Muhammad Faraz 
Silver Primed for 7% Rally $40.90 Target in Sight
With silver currently trading at $38.10, our technical analysis points to a strong bullish case targeting $40.90 – representing a potential 7.35% gain from current levels. This move would mark a significant breakout from recent consolidation and could open the door to further upside. Below we examine the multiple converging factors that make this target compelling.
Technical Setup Supporting $40.90 Target
1. Breakout From Consolidation
- Price has formed a symmetrical triangle over past 3 weeks
- Currently testing upper trendline resistance at $38.50
- Break above this level would confirm pattern completion
2. Momentum Indicators Turning Bullish
- RSI bouncing from 50 level (bullish momentum)
- MACD histogram showing increasing bullish divergence
- Stochastic oscillator emerging from oversold territory
3. Measured Move Projection
- Triangle height projects $2.80 minimum target
- From $38.10 breakout point = $40.90 target
- Aligns with previous resistance from April highs
4. Volume Confirmation
- Rising volume on up days signals accumulation
- Declining volume on pullbacks shows lack of selling pressure
Fundamental Catalysts
Industrial Demand Growth
- Solar panel manufacturing expansion
- 5G technology component needs increasing
- Electric vehicle production accelerating
Monetary Factors
- Potential Fed rate cuts weakening USD
- Inflation concerns boosting precious metals
- Central bank diversification flows
Gold-Silver Ratio
- Current 82:1 ratio historically favors silver
- Mean reversion potential could drive outperformance
Key Levels to Watch
Support
- $37.80 (50-day moving average)
- $37.20 (Recent swing low)
- $36.50 (Strong psychological support)
Resistance
- $38.50 (Triangle breakout point)
- $39.75 (Previous high)
- $40.90 (Primary target)
Trading Plan
Entry Strategies
- Immediate entry at current $38.10 with tight stop
- Wait for confirmed breakout above $38.50
- Pullback entry near $37.80 support
Stop Placement
- Conservative: Below $37.20
- Aggressive: Below $37.80
Profit Targets
- First take-profit at $39.75 (50%)
- Final target at $40.90 (50%)
- Consider trailing stop above $39.00 if momentum strong
Position Sizing
- Risk no more than 1-2% of capital per trade
- Favor smaller initial position with ability to add
Risk Factors
Technical Risks
- False breakout above $38.50
- Overhead supply at $39.00 area
- Gold weakness dragging silver lower
Fundamental Risks
- Stronger-than-expected USD
- Delayed Fed rate cuts
- Industrial demand slowdown
Market Structure Risks
- COMEX positioning extremes
- ETF outflows
- Miner hedging activity
Conclusion
Silver’s technical setup presents a compelling bullish case for a move to $40.90 from current $38.10 levels. The convergence of a breakout pattern, improving momentum, and supportive fundamentals creates favorable conditions for this 7% advance.
Traders should watch for confirmation above $38.50 and manage risk appropriately given silver’s volatility. The $40.90 target represents a high-probability objective that aligns with both technical measured moves and previous resistance levels.
As always in commodity trading, maintaining disciplined risk management will be crucial to capitalize on this potential opportunity while protecting against downside scenarios. The coming sessions should provide important confirmation signals for this trade setup.
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