Silver – Channel Breakdown and Double Top

By Roger Baettig | December 05 2012 10:00 AM

Technical Update for Silver

Previous: Silver Trades in a Rising Channel and Maintains Bullish Momentum (11/29)

Reuters

Silver used for industrial production is expected to rise to a record 511 million ounces by 2014 following a two consecutive years of decline. More than half of all silver is used in industrial applications, from automobiles to polyester.

Sponsorship Link

Silver 4H chart 9:05AM EST 12/5/2012

Channel Breakdown: Silver was seen last rallying in a rising channel. After barely making a new high, silver fell back and this time broke down below the rising channel seen in the 4H chart. This breakdown also pushed the RSI below the 40 level in the 4H chart. This reflects a loss of the bullish momentum made in the November rally. In fact if the RSI pushes below 30, there is bearish momentum being born.

Double top: If you consider the latest high at 34.39 insignificantly higher than the previous at 34.27, you can argue that a double top is being complete as the market pushes below the base support at 32.88. This base support is a resistance/support pivot.

Retracement support: The 61.8% retracement level of 32.08 is also a previous mini-consolidation period support. for now, this could be a bearish target. A conservative target should be considered because there is no trend at the moment, and the further we are from the 200SMA the more likely it will revert back towards it. Then, if the market does break below the 32.00 handle, silver has the 30.65 low in sight.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.