In yesterday’s commentary, we looked at the strong move in silver prices above a short-term trend-line and touch of resistance around the 20.50 level. Silver found resistance at the first noted level and has since pulled back a bit, which leaves us with the question of whether it is simply a small pullback before seeking higher levels, or if it is the beginning of a move back down towards the 19.20 support level and the continuation of a broader daily range.

Since touching off on support at 19.20 on 7/20 there is a series of higher highs and higher lows developing, visible on intra-day time-frames, but it’s certainly not making for a very strong trend – not much is right now. Vol is low these days, and as such, looking for extended moves has been disappointing.

That aside, a decline to the lower parallel (~19.85/90) created during the past week could present another short-term dip-trip for a push back to the 20.50 level seen yesterday, or better. A break below the lower line would then strengthen the notion we will see a decline towards 19.20, and thus, at the least, a continuation of a broader daily range.

(Click on image to enlarge)

We will continue to watch the positioning of large speculators in the futures market, as a decline from record long holdings along with a correction, whether it be in price or time, could help set the stage for another broader advance higher. For now, it would seem that until that happens, silver will have a difficult time pushing to and sustaining new heights.