Silver rebounds from ABCD pattern but further downside targeted
Silver prices have suffered a substantial loss while in the midst of a bearish slide that has been in place since the middle of May. Since the failure to recapture the $16 handle, the silver daily chart shows six consecutive bearish daily candles that appear to have found some support from the $14.50 level.
It is around that noted support level that a potential bullish ABCD pattern may have formed. Point D of the bullish reversal pattern was confirmed with the 127.2% Fibonacci expansion level of the B to C move. A bullish bounce could support a move tentatively above the $15.00 level before see bearishness resume. If we see the downward pressure make fresh lows, the next level of support could come from the $13.71 -$14.00 area.
If we see another major round of commodity weakness, we will potentially look for a long-term bullish bet around $13.50. While the potential for further metal weakness could be supported by a strengthening dollar, silver could be the least hit of the precious metals.
The trade: Sell Silver at $15.16 with a stop loss at $15.46 and a take profit at $14.26 The Risk/Reward Ratio is almost 1: 3
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading
