Silver Weekly Technical Outlook

Comex Silver (SI)

Silver dropped further to as low as 26.30 last week but rebounded strongly from there towards the end. THe break of 27.795 resistance indicates that a short term bottom is in place. Initial bias is mildly on the upside this week for further recovery to 28.325/29.825 resistance zone. But upside should be limited there and bring another fall. On the downside below 26.30 will target medium term retracement level at 26.103 and below.

In the bigger picture, note that weekly MACD's break of signal line suggests that a medium term top is in place. Touching and breaking of 38.2% retracement of 17.735 to 31.275 at 26.103 will confirm this case and deeper correction should be seen to 24.98 support and below. Though, we'd expect downside to be contained by 22.84 cluster support (61.8% retracement of 17.735 to 31.275 at 22.907) and bring rebound. On the upside, break of 31.275 high is needed to confirm up trend resumption. Otherwise, we'll stay neutral and expect more consolidation/correction below 31.275.

In the long term picture, silver's up trend from 2001 low of 4.01 is still in progress. We'll stay bullish as long as 21.44 resistance turned support holds and would expect such up trend to extend further to 161.8% projection of 4.01 (2001 low) to 21.44 (2008 high) from 8.4 (2008 low) at 36.6 next.

Comex Silver Continuous Contract 4 Hours Chart