Silver (XAGUSD) has reached its first key resistance level at $26 following this week’s breakout from $24.50.
I discussed silver’s breakout potential on Tuesday, hours before it entered full-on rally mode.
But we’ve known about this bull flag pattern for months.
I first mentioned it on October 13th when I said XAGUSD was a “buy the dip market”.
Before we get to the key levels I’m watching now, I want to discuss the measured objective I wrote about recently.
I’ve seen a few comments stating that XAGUSD has formed a wedge pattern over the last few months, not a bull flag.
And in my opinion, it’s both.
The chart structure began as a bull flag in August and September and later morphed into a wedge pattern after October.
So, the bull flag’s measured objective of $40 that I mentioned on December 4th is legitimate and realistic, in my opinion.
In fact, I wouldn’t be surprised to see silver take out its all-time high of $50 in 2021.
As for the next few weeks, the price action for XAGUSD is immaculate.
As of this writing, $26 is intact as resistance.
A daily close above that would open the door to the year-to-date high just below $30.
Above that, we have $35, followed by the measured objective of $40.
If XAGUSD does pull back from the $26 resistance area, I will keep a close eye on how it reacts to $25 as new support.
I’d expect buyers to defend that area to keep the rally effort intact.
In closing, I expect silver, along with gold, to do very well in 2021.