It reaches the top of the long-term range

• Silver has topped a long-term range.
• It is at risk of a pullback, although price action remains quite bullish.

Silver (XAG/USD) topped a wide range stretching from $26 to $30.

It has just tested firm resistance at the top of the range and is in danger of pulling back.

4 hour silver chart

Silver has formed a Measured Move price pattern since the August 8 low. Such patterns consist of three waves in a zigzag pattern, with waves A and C usually of similar length. In the case of silver, A and C are of similar length, adding faith to the theoretical price can correct back.

The Relative Strength Index (RSI) momentum indicator is rising in line with the price, however, which slightly supports the near-term bullish trend. Given that it is a principle of technical analysis that “the trend is your friend”, there is a chance for silver to bypass the resistance at the top of the range and continue higher. A decisive break above the ceiling of the range would confirm such a breakout and lead to a likely move to $32.94, the 0.618 Fibonacci ratio of the extended C leg above.

A decisive break would be one accompanied by a long green candlestick that broke clearly above the level and closed close to its high, or three candlesticks in a row that broke above the level.

Currently there are no signs from the price action that silver is about to correct back – just the resistance line drawn on the chart. An inverted candlestick pattern, such as a shooting star or a hanged man, for example, would substantially increase the chances of a pullback developing. Such a move would likely find firm support at $30.00, the top of wave A.