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Silver Faces Heavy Resistance: Time to Consider a Short?

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The price of Silver recently reached a key weekly demand zone from 2012, a level that has historically been significant in the market. Currently, the price appears to be following a similar reversal pattern to Gold, suggesting potential downside in the near term. For a clearer understanding of this correlation, check out my detailed analysis of Gold on my page, where I delve into its ongoing reversal pattern.

In the chart provided below, you’ll see my weekly analysis of Silver, highlighting this critical supply area:

View the chart here.

Market Sentiment and COT Insights
Market sentiment in Silver is still leaning bullish among retail traders, contrasting with the more developed reversal in Gold. The Commitment of Traders (COT) report continues to show strong bullish positioning among retail traders in Silver, which often signals a potential contrarian move. Meanwhile, the Forecast Indicator, which captures seasonal tendencies, is pointing towards a possible reversal in Silver during this part of the year.

Technical Outlook
From a technical perspective, Silver’s move into this weekly demand zone could mark the start of a more pronounced downtrend, aligning with the reversal patterns seen in Gold. Historically, this zone has acted as a strong resistance level, where price has struggled to break higher. As such, it’s a prime setup for a short position with a focus on capturing downside momentum.

The current setup aligns with both technical signals and the COT report’s insights, indicating that smart money may soon start to unwind long positions, adding to the potential for further declines in Silver.

Trade Setup
Given the current scenario, we’re keeping a close eye on Silver for a short setup. Key factors to watch for confirmation include:

-A sustained rejection at the current demand level.
-Divergence signals aligning with a downward move.
Further weakening in Gold, which could act as a leading indicator for Silver’s bearish movement.

Final Thoughts

The current analysis suggests that Silver could be entering a potential reversal phase, similar to what is already underway in Gold. However, it’s crucial to remain patient and wait for confirmation signals before committing to a short position.

I’d love to hear your thoughts on this analysis. Do you think Silver’s reversal is imminent, or is there more room for upside before a potential downturn? Let me know in the comments below!

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