Silver retreats from near record highs, leaving bulls at a crossroads.
2026-01-08 00:50:36
Silver prices fell sharply from $82.77 after failing to break through its all-time high. Bulls are facing a crucial decision point at the $77.05 support level. A break below this level would target the $73.24 trendline before the release of the non-farm payrolls (NFP) data.
Key support area under test
On Wednesday (January 7), spot silver fell sharply during the US trading session, after rising to $82.77 but failing to reach its all-time high of $83.94. The subsequent reversal brought the market back to the key retracement range of $78.70 to $77.05. As I stated in my report on Tuesday, this area is dominating the market's short-term direction.
If the price continues to break through $78.70, the bullish trend will continue; if it continues to fall below $77.05, the bearish trend will dominate.
Technical Analysis: Closing Reversal Top Restricts Upward Momentum
(Spot silver daily chart source: EasyTrade)
On the daily chart, the main trend remains upward, but the "closing reversal top" formed at $84.03 has temporarily capped the gains. This reversal pattern has not yet been confirmed. A break below $77.07 would confirm the pattern and could trigger a rapid decline, targeting $64.79 to $60.25.
The trendline extending from the November 21 low of $48.64 is also at play. Today, this trendline is at $73.24 and could act as support, protecting the swing low of $70.07.
Downside Path: Multiple Support Levels at Risk
Looking at the potential downside path from the high: Today's high of $82.77 is lower than the previous high of $83.94. Selling pressure has broken below the 61.8% Fibonacci retracement level of $78.70 and is currently testing the 50% retracement level of $77.05.
If the $77.05 support level is breached, selling pressure could accelerate towards the $73.24 trendline. Buying may occur on the first test of the trendline, but if it is broken, selling pressure will intensify again, with the next key support level at $72.41, followed by the major low at $70.07.
If the price decisively breaks below $70.07, the trend will turn downward, the short-term bias will completely shift to the downside, and it may trigger a more severe decline.
Bulls need a strong counterattack to revive the upward trend.
For the rally to resume today, buyers must intervene strongly around $77.05 and push the price back above $78.70. Buying needs to strengthen consistently throughout the trading session to push the price back into the $82.77 to $84.03 range.
Fundamental Drivers: Profit-taking and Position Adjustments Ahead of Non-Farm Payrolls
From a fundamental perspective, short-term and long-term factors are in conflict, with short-term factors dominating today. Short-term price movements are primarily driven by profit-taking ahead of Friday's non-farm payroll report, which will provide more clues about the timing of the Fed's next rate cut. This uncertainty is prompting some long positions to reduce their holdings.
Furthermore, buyers who entered the market on Monday due to safe-haven demand may choose to take profits as uncertainty surrounding the situation in Venezuela eases. Finally, the CME's move to raise margin requirements two weeks ago may have kept leveraged speculators on the sidelines, who were one of the main forces driving up prices at the end of last year.
Market Outlook: The key level of $77.05 will determine the next move.
Looking ahead, today's closing price action will depend on traders' reactions to $77.05 and $78.70. Given the current downward bias, a break below $77.05 could lead to further significant price declines and ultimately a test of the trendline currently at $73.24.
Key support area under test
On Wednesday (January 7), spot silver fell sharply during the US trading session, after rising to $82.77 but failing to reach its all-time high of $83.94. The subsequent reversal brought the market back to the key retracement range of $78.70 to $77.05. As I stated in my report on Tuesday, this area is dominating the market's short-term direction.
If the price continues to break through $78.70, the bullish trend will continue; if it continues to fall below $77.05, the bearish trend will dominate.
Technical Analysis: Closing Reversal Top Restricts Upward Momentum
(Spot silver daily chart source: EasyTrade)
On the daily chart, the main trend remains upward, but the "closing reversal top" formed at $84.03 has temporarily capped the gains. This reversal pattern has not yet been confirmed. A break below $77.07 would confirm the pattern and could trigger a rapid decline, targeting $64.79 to $60.25.
The trendline extending from the November 21 low of $48.64 is also at play. Today, this trendline is at $73.24 and could act as support, protecting the swing low of $70.07.
Downside Path: Multiple Support Levels at Risk
Looking at the potential downside path from the high: Today's high of $82.77 is lower than the previous high of $83.94. Selling pressure has broken below the 61.8% Fibonacci retracement level of $78.70 and is currently testing the 50% retracement level of $77.05.
If the $77.05 support level is breached, selling pressure could accelerate towards the $73.24 trendline. Buying may occur on the first test of the trendline, but if it is broken, selling pressure will intensify again, with the next key support level at $72.41, followed by the major low at $70.07.
If the price decisively breaks below $70.07, the trend will turn downward, the short-term bias will completely shift to the downside, and it may trigger a more severe decline.
Bulls need a strong counterattack to revive the upward trend.
For the rally to resume today, buyers must intervene strongly around $77.05 and push the price back above $78.70. Buying needs to strengthen consistently throughout the trading session to push the price back into the $82.77 to $84.03 range.
Fundamental Drivers: Profit-taking and Position Adjustments Ahead of Non-Farm Payrolls
From a fundamental perspective, short-term and long-term factors are in conflict, with short-term factors dominating today. Short-term price movements are primarily driven by profit-taking ahead of Friday's non-farm payroll report, which will provide more clues about the timing of the Fed's next rate cut. This uncertainty is prompting some long positions to reduce their holdings.
Furthermore, buyers who entered the market on Monday due to safe-haven demand may choose to take profits as uncertainty surrounding the situation in Venezuela eases. Finally, the CME's move to raise margin requirements two weeks ago may have kept leveraged speculators on the sidelines, who were one of the main forces driving up prices at the end of last year.
Market Outlook: The key level of $77.05 will determine the next move.
Looking ahead, today's closing price action will depend on traders' reactions to $77.05 and $78.70. Given the current downward bias, a break below $77.05 could lead to further significant price declines and ultimately a test of the trendline currently at $73.24.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
