Silver futures too continue to move sharply lower, aided and abetted by yesterday’s release of the FOMC minutes which the market has interpreted as being more hawkish than expected.
However, silver has been in a steep downtrend since breaking below the key 30.70 price area earlier in the week and since then we have seen widening spreads coupled with rising and bearish volume, a sure sign if any were needed of bearish intent.
Yesterday’s wide spread down bar was associated with extreme selling volume and closed the session for the March silver futures contract at 28.62. The “death cross” technical signal has yet to appear on the silver chart but the 50 day ma (in blue) is now setting up to cross the 200 ma (in green) and should this occur will add further momentum to silver. The longer term trend for silver is also heavily bearish and with selling volumes on both our time frames, coupled with bearish volumes on both and a red heat map the outlook for silver is not encouraging.
The next key level is now in the $26.00 per ounce region – an extremely well defined area of support and should this be breached then there is clear water below to take the silver price down to the $22 per ounce level in the longer term.
By Anna Coulling
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