Best Financial Markets Analysis Article Silver has been in a steep intermediate downtrend since early June, but there are signs that this downtrend may soon have run its course, or even have run its course already. On the 1-year chart we can see that having failed to find any serious traction near its 50-day moving average, silver broke lower again towards the important support level shown, which is expected to put a floor under the price, especially as the Cup & Handle formation shown on the chart is a strongly bullish pattern, although it is very possible that its downtrend will end around the current level as it has arrived at the trendline support of a longer-term potential uptrend channel, also shown.

As it is becoming increasingly deeply oversold, it is logical to start increasing positions here and especially if it should drop further to approach the support level in the $11.50 - $12 area. However, the importance of this support level means that long positions should be closed out, scaled back or protected with options etc in the event that the price breaks clear below it, as this would be expected to lead to significant further decline.

The COT chart for silver suggests that the time is not yet ripe for a major uptrend to develop or for a serious challenge of the highs to occur. What is therefore likely to happen is that a trading range develops for some weeks and perhaps a month or two between the support and resistance levels shown on the silver chart.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2009 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.