Silver is starting 2025 with a highly compelling technical setup that could set the tone for its early-year performance. The chart reveals a beautifully formed head and shoulders pattern, marked within an orange rectangle, which developed during the second half of 2024. This pattern led to a decisive breakdown in December, breaching both the yellow neckline and the red uptrend line, signaling a bearish shift in sentiment.
Following the breakdown, silver tested the neckline and uptrend line from below, confirming their roles as new resistance levels. The bounce from these areas reinforced the negative sentiment, indicating that sellers were still in control. As long as silver remains below these two critical levels, the outlook remains bearish, with further downside expected in the coming weeks.
However, the new year brings an interesting twist. In the early hours of Thursday, silver is attempting to reclaim these resistance levels. Should the price break and hold above the yellow neckline and red uptrend line, it would represent a powerful reversal and a strong signal to go long, potentially targeting higher levels.
On the other hand, if silver fails to maintain its current momentum and instead creates new monthly lows, this would confirm the dominance of sellers and provide an excellent signal to go short. All eyes are on whether buyers can overcome these resistance levels or if bears will reassert control to push prices lower.