At the end of another lively trading week silver futures continue to remain heavily bearish on the weekly chart, despite a modest recovery in Thursday’s trading session which has continued overnight on the electronic market with the May silver futures contract closing marginally higher at $28.80 per ounce.
Nevertheless, the weekly chart for silver prices remains weak with the upper area of price resistance clearly defined in the $32.00 per ounce level whilst the lower level is also well defined by the isolated pivot lows in the $26.50 per ounce region.
In addition, and coincident with this level, is the 200 ma (in green) which is currently sitting at the $27 per ounce price point, just above the potential platform of support.
This price level is now critical if further declines in silver are to be brought to a halt but if this level is breached, then we could see a much deeper move for silver prices, particularly if the price action breaks this key technical indicator.
Any bearish move lower could even test the $19.60 area longer term, a price point not seen since 2009.
Moving to our other indicators, these are simply reinforcing this bearish picture. The weekly heat map remains firmly bearish and with volumes on both our time frames also reflecting heavy selling pressure, the outlook, for the time being, continues to be negative.
Finally, the recent sell off in silver has also been exacerbated by a return of US Dollar strength, as evidenced on the dollar index. This too is also at a key technical level, and should the Index break through the 81.60 then this will add further downside momentum to silver, as a result.
By Anna Coulling
Come and join my live training room and discover why in today’s complex markets price behaviour holds the key to your trading success.