Waves of heavy selling rushed through the commodities complex in Tuesday's trading, with only the crude oil complex and a few of the precious metals managing a rally. One bright spot was the Silver futures, which managed to hold above $33.00 per ounce despite a sell-off in copper, platinum, and palladium, and gold. This strength may not last, as the technical picture turned bearish heading into Wednesday's session.
Silver managed to hold support established by a Pennant chart pattern, shown here on the 60-minute time frame, until reaching the apex of the formation in a very narrow trading range. This price action forced a technical breakout from the Pennant, breaching the support trend line and setting up for a sell-off.
This may be a short term retracement in the market, though it is likely that silver will eventually take on the same trend direction as the rest of the metals. The breakout from the Pennant cam with minimal momentum and the price has stabilized near the initial breach of support, which heightens the possibility of a shallow correction rather than a major decline.
The current forecast projects the price of silver to test the $31.39 level, with a further downside of $31.27 also possible.
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