Great to see silver finding some much needed upside momentum following the plunge in prices during March, and with gold leading the way and helping to deliver bullish momentum to the industrial metal, the question now is whether this is set to continue and if so for how much longer? The technical outlook for gold is clear on the daily chart, with little of either volume or price based resistance. For silver, this is not the case and two substantial levels now lie ahead.
The first of these is the volume point of control denoted with the yellow dashed line just below the $18 per ounce level. This is the fulcrum of the market at present and as such we can expect to see congestion build in this region, so progress here is likely to be slow with sideways price action. Immediately above we then have our second level denoted with the blue dashed line of the accumulation and distribution indicator. The indicator develops these levels automatically and thickens them, each time a level is tested and holds. Put simply, the thicker the level the stronger it is and the $18.40 per ounce region is, therefore, a strong area of price resistance that has to be breached.
The good news is we can see we have a rising price and rising volume with an excellent combination on Friday of a wide spread up candle on excellent volume and with the trend monitor indicator supporting the move, the bullish sentiment prevails. The question now is whether the momentum from gold will be sufficient to drag silver through the current levels and out the other side into the calmer waters at $18.50 per ounce and beyond. Given the current bullish sentiment for gold, this seems likely and once through there, on to $19 per ounce as volume falls away rapidly on the VPOC histogram.