There are times when technical analysis rewards patience. Rarely does a chart take decades to complete, but this one may prove the wait worthwhile.
Could silver be poised to end a seven-year downtrend? Might commodities be entering a prolonged bullish cycle?
The chart above depicts silver over the last 40 years. It appears to be forming a long-term bullish “Cup and Handle” pattern, a classic reversal structure that often precedes significant rallies.
Currently, silver remains inside a seven-year falling channel that could represent the handle portion of the larger pattern. A decisive breakout above the channel, marked here as point (1), would be a bullish signal likely to draw renewed buying interest.
Right now, the upper boundary of the handle is acting as resistance, making the next price action a critical test for silver. A clear break above this resistance would increase the probability that silver has completed its multi-decade base and is beginning a sustained uptrend.
If silver does break out, it could spark broader commodity strength and attract traders who watch long-term technical formations. Conversely, failure to breach the handle’s resistance could keep silver range-bound or extend the correction. Monitoring volume and momentum indicators during any breakout attempt will help confirm the move.
In summary, the potential cup-and-handle on silver represents a significant setup: a multi-decade base with a long handle that now faces a pivotal resistance test. Traders and investors watching commodities should pay attention to any confirmed breakout, which would signal a meaningful shift in silver’s long-term trend.
ORIGINAL SOURCE: Silver; Mother of all bullish “Cup & Handle” patterns? by Chris Kimble at Kimble Charting Solutions on 2/25/18