Weekly Report 07/03 -11/ 03/ 2011
Silver soared, touching the second PRZ of the AB=CD pattern at 200% Fibonacci of BC leg. The technical problem is seen when we look at the correction ratio of BC leg since it has been achieved between 50% and 61.8% of AB leg. This correction always places the PRZ at 161.8% or 200%-224% and in some rare cases it could be placed at 261.8%. Indeed, in such cases this extension doesn't represent the ideal case due to the alternation principle of harmonic studies. To recap, the metal is currently confirming the breach of 36.00 levels, where 200% exists and thus, areas of 37.20-224%- could be touched and a break of which will send the metal higher towards 39.05. The harmonic formation is a bearish one; whilst momentum indicators are showing overbought signs. Therefore, the bullishness is in favor during this week but we should be careful.
The trading range for this week is among the key support at 32.85 and key resistance now at 39.05.
The general trend over short term basis is to theupside,targeting 39.05 as far as areas of 30.80 remain intact with weekly closing.
Previous ReportSupport35.9035.3035.1034.6034.15Resistance36.9037.2037.5037.9538.48RecommendationBased on the charts and explanations above our opinion is, buying silver(cautiously) around 35.50 targeting 37.15 and stop loss with a daily closing below 34.80 might be appropriate.