Technical Sentiment: Bearish
Key Takeaways
- Precious metals remained relatively quiet on Thursday;
- Bearish Price Action indicates another decline is in store for Silver;
- $19.00 at risk, followed shortly after $18.64.
Investors continue to seek refuge in USD and AUD, changing their old habit of hedging into precious metals.
Technical Analysis
Silver maintains a very bearish outlook, moving from one support level to the next one, pricing consistent Lower Lows and Lower High. The precious metal market has been remarkably unattractive to investors as of late, despite tensions between Russia and Ukraine, not to mention the destructive Euro sell-off. In these conditions it is not far-fetched to prepare for a longer term breakdown, at least until the technical landscape changes for the better.
Silver spiked up to $19.34 at the beginning of the US trading session and immediately bounced back down, confirming last week’s support has now turned into resistance. Price action shows a Bearish Engulfing Bar forming on the Daily chart. Despite extreme oversold conditions, bearish price action remains a strong indication that selling pressure has not exhausted and traders are prepared to advance lower.
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Immediate support is located just a few cents away. Large offers are bound to protect the psychological handle of $19.00; however we expect this support to break in the end, exposing $18.64 – the main attraction area for sellers. Stop losses will begin to accumulate above $19.35 for the time being. We advise short sellers to unwind their positions if Silver rallies above this level on Friday or early next week.
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Prepared by Alex Z, Chief Currency Strategist at Capital Trust Markets
