Silver poised to consolidate above $59 following correction

Last Friday, silver set a new historical high, climbing above $59 per ounce. However, the price failed to consolidate at this level, triggering a local correction. Active profit-taking on long positions may send quotes down to the $57–$58 range, but a deeper decline is unlikely due to strong support at $56.5. Buying silver near this threshold could be a viable strategy if the price returns to $59. Traders may give it a shot.

From a technical standpoint, the asset is now correcting but retains high recovery potential. The RSI Indicator has already retreated to neutral territory. On the other side, the Stochastic Oscillator is currently generating a bullish signal near the overbought zone. On the hourly timeframe, the next hurdle for bears is the 100-day exponential moving average (EMA100). If sellers breach this level, the EMA200 and the $56.5 threshold would preclude an even steeper decline.

According to Bloomberg data, silver ETFs saw inflows of 590 tons last week—the largest since July, increasing deficit concern among traders. Inventories at the London Metal Exchange (LME) grew slightly due to increased supply from China, leaving Shanghai stocks at their lowest level in a decade. No surprise that trading February silver contracts with strike prices of $80 and $85 per ounce spiked in the United States.

At a recent London Bullion Market Association meeting, mining company executives stated that the current rally has solid foundations. India, for instance, provided significant support for the metal, purchasing 60 million ounces in October. This is four times more than a year ago. Demand is so robust that, in some cases, silver is being transported by air, just like gold. Despite the fact that prices have doubled over the past year, upside potential remains intact.

Try out the following trading strategy:

Buy silver in the $57–$58 range, with Take profit at $59 and Stop loss at $56.5.