Silver Technical Updates
Silver was sliding with gold after the outside bar on Tuesday. However, since the break above 39.50-39.60 resistance area, silver remains in an upwards channel and respected channel support Today (Thursday).
- The daily chart shows the bounce not only from the channel support but bounce from the previous resistance of a sideways consolidation.
- This suggests that despite the sharp slide, silver is trying to maintain the bullish momentum is established when it broke out of this range.
- We reached 61.8% retracement already at 43.00, and the next target is 45.85.Above that, we can be looking at the 2011 highs at the 49.50-49.85 area.
- The Jackson Hole Symposium is underway with Bernanke's speech at about 10:00AM EDT tomorrow (Friday) so if the market pushes above the current August high of 44.18 (the high of the outside bar), we should be back on the bullish scenario.
- The 4H Chart shows that the structure of the decline is much like gold's, with a 5-wave run. Therefore, it should only be the first leg to a correction.
- The 3 main corrective structures we can anticipate are a zig zag (ABC, with further bearish outlook), a Triangle (congestion after such volatility), or a flat.
- Coming out of a volatile move, I would prefer the triangle scenario as the market cycles from high to low volatility.
- Or if you get a zig zag, I would NOT look for C=A wave equality, but more of a C
- The decline is still considered a correction, unless we get a break below the 36.95-37.00 area. Then, we would be looking for the 33.00 support.
Fan Yang CMT
Chief Technical Strategist