The $106 support level for silver faces significant testing pressure but has reasonable probability of holding in the near term due to strong underlying fundamentals.
The technical analysis in the news article provides several key insights about silver's current market dynamics:
Technical Context and Support Level Analysis:
Record High and Correction Phase: Silver reached an all-time high of $121.66 on January 29th, 2026, before experiencing profit-taking that pushed prices down to around $112.10. This represents a correction of approximately 7.8% from the peak, which is a natural technical adjustment after such an aggressive rally.
Technical Indicators: The article notes that silver had been in "deeply overbought territory" with RSI indicators showing extreme bullish momentum. The current pullback is described as a "technical necessity rather than a signal of trend reversal" due to the significant deviation from moving averages (20-day and 50-day).
Support Zone Structure: The $106 level is identified as "important short-term support" in the technical analysis. This represents a key psychological and technical level that would need to hold to maintain the bullish structure.
Fundamental Factors Supporting Silver:
Safe-Haven Demand : Despite the pullback, silver has accumulated a monthly gain of over 60%, reflecting persistent demand for safe-haven assets amid economic uncertainty and geopolitical risks.
Geopolitical Tensions: The article highlights ongoing tensions in the Middle East, particularly around Iran and the Strait of Hormuz, which continue to provide a risk premium for precious metals.
Monetary Policy Expectations: Market expectations for potential Federal Reserve rate cuts, reinforced by political pressure for accommodative policy, are eroding confidence in US dollar assets and supporting alternative stores of value like silver.
Currency Hedge Characteristics: Silver exhibits both safe-haven properties and characteristics as a hedge against currency devaluation, which remains relevant given concerns about dollar strength.
Risk Factors and Technical Vulnerabilities:
Overheated Technical Conditions: The article notes that silver's rally had been "extremely steep" with "barely any significant retracement," making the current correction a necessary digestion phase.
Momentum Cooling: Both RSI and MACD indicators show cooling bullish momentum, with the MACD's red bars "noticeably shortened," suggesting the uptrend is entering a consolidation phase.
Critical Break Level: The analysis warns that a break below $106 support "could lead to a further retracement towards the $100 zone to cool down overheated technical indicators."
Probability Assessment: The $106 support level has a reasonable probability of holding based on:
Strong underlying fundamental demand for safe-haven assets
Persistent geopolitical tensions supporting precious metals
Technical necessity for consolidation rather than trend reversal
The article's editorial view that "pullbacks are more likely to be viewed as sentiment recalibration rather than the end of the trend"
However, traders should monitor:
Volume and Price Action around the $106 level
Geopolitical Developments that could affect risk sentiment
Federal Reserve Policy Signals and dollar strength
Technical Confirmation of support holding through multiple tests
Conclusion: While the $106 support faces testing pressure from profit-taking after silver's record-breaking rally, the combination of strong safe-haven demand, geopolitical tensions, and monetary policy expectations provides fundamental support that increases the probability of this level holding in the near term. However, given the extreme nature of the recent rally, traders should be prepared for potential volatility and further testing of support levels as the market digests gains. support?
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