Below looks at the pattern of Silver on a monthly basis, back to the 1970’s. Since the 2011 high in Silver, it has created a series of lower highs and lower lows.

An important cluster is in play for Silver, where it has the potential to “Back Off” a good bit!

(Click on image to enlarge)

The rally that has taken place this year, due to lower highs and lower lows, has to be considered a counter trend rally, until falling resistance is taken out. Silver hit a cluster of resistance (4 lines) and its Fibonacci retracement level at (1). Since hitting this cluster, Silver has been soft of late.

Now Silver is testing a key support line at (2).

If Silver would break this support, it could attract sellers and the price could “Back Off” a good deal. What happens at this support test looks to be very important for the price of Silver and the metals space going forward.