Technical Sentiment: Bearish

Key Takeaways

• Dollar strength makes precious metals less attractive;
• Silver plummeted 29 cents since the start of the US session;
• $19.00 remains the primary target, followed closely by $18.64

Increasing short positions are pressuring Silver to dive lower, as traders will be searching for large offers around the $19.00 handle.

Technical Analysis

A short-lived consolidation turned very sour rather quickly at the beginning of the US session. Traders were quick to resume the recent Silver selling spree as soon as price tested 13^th August low at $19.70. Today’s price action takes the shape of a Bearish Engulfing Bar, a good indication that this move is unlikely to exhaust anytime soon.

With the main moving averages on the Daily chart becoming increasingly distant, a correction back these levels is less likely. Escalating sell-offs are a natural market reaction in these circumstances and traders will continue blowing even the smallest of reasons out of proportion just to confirm their bearish view on Silver.

Support levels can be found at $19.00, where a temporary bounce is likely to form before $18.64, the true bottom, will be tested. This bearish scenario will remain valid as long as price stays below $19.70 (short term pivot zone between 13^th August daily low and 19^th August daily high).

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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets