Forex Price Action – Silver forms Strong Breakout Bar, More Upside? Aug. 20th

Being the little brother of the precious metals (to Gold that is), Silver broke the stalemate (and malaise) as it broke and closed above the key $28.36 resistance level.  And she arrived – doing so in impressive fashion with a strong breakout bar and good follow through, suggesting likely continuation.  You can see further details of this with the strong close on the breakout bar, along with the no wick on the following bar, communicating the metal was bought from the open.

As you can see, there was also plenty of pre-breakout pressure or tension building up with the higher lows, along with the recent price action squeeze and consolidation holding above the 20ema, just before the final push.

However, we have to be cautious before bulls uncork the champagne, for even though it crossed the short term marginot line at $28.36, which has not seen a daily close above this since June 19th, the weekly 20ema is just ahead, which was today’s high.  Silver has not closed above this since March 9th this year, so you can bet there are probably some bearish models considering selling here.

Should the precious metal close above this weekly 20ema, expect further upside and new long term models to get long.  Intraday traders can wait for pullbacks to the prior resistance level which now becomes support for a possible breakout pullback setup.

forex price action breakout bar breakout pullback setup aug 20th

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Global Market Commentary:
For most people needing a nap, today was a good day as the markets pretty much trotted in place and the big winner in the US indices was the Dow losing a Whopping 3.56pts.  Most of the volatility potential was taken out as the ECB quelled speculation about more intervention to save the EZ debt issues (as if printing solved that in the past).

This was due to the Der Spiegel article suggesting it (the ECB) was considering buying debt issued by Spain and Italy should the rates hit untenable levels.  Of course the Bundesbank reminded people of its opposition to bond purchases (considering none of the countries have met their obligations yet).

The main winners on the day was Apple which touched the mark of the beast hitting $666 before closing just below it at $665.60.  Also, Gold gained solidly (under-performing v. Silver) adding $3.80 while Oil pulled back to the crucial $95.32 level before bouncing to close at $95.92, down $.09 on the day.

Upcoming Economic Announcements:

AUD Reserve Bank Board – August Minutes 01.30GMT 21.30EST
NZD Reserve Bank of New Zealand 2-Year Inflation Expectation 03.00GMT 23.00EST
GBP Public Sector Net Borrowing (Pounds) 08.30GMT 04.3EST
JPY Adjusted Merchandise Trade Balance (Yen) 23.50GMT 19.50EST


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