Silver Sliding Sharply from a Double Top

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XAG/USD (Silver) 1H Chart 9/12/2012 10:55AM EDT

Silver, which has been rising sharply on the back of expectations of the Fed moving to implement QE3, fell sharply a day before the FOMC meeting, which will be on Thursday (9/13), 2:00PM EDT (18:00GMT). As seen in the 1H chart, silver has completed a double top and fell to the 200-hour SMA before finding some support around 32.45.

The RSI dipping to 30 suggests the momentum has turned sideways, and maybe slightly bearish in the near-term. If there is a pullback that holds silver under 33.50, preferably even below the 33.23 pivot, then the market would have put in a top in the short-term. This scenario would be accompanied by the RSI holding under 60 after a pullback.

Looking at the 4H chart, we see the next support pivots. 31.87-32.00 reflects a brief consolidation support area. Below 31.85, and with RSI 4H reading under 40, we have a more bearish outlook. 31.24 is the next pivot, but really that would expose the 30.00 handle.

XAG/USD (Silver) 4H Chart 9/12/2012 11:15PM EDT

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

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