Silver, Like Gold, Appears Technically Broken; Potential for Near-Term Downside Rising

A few weeks ago we highlighted our belief that gold appeared to be broken, purely from a technical and price-action perspective.

Turning our attention to silver, we believe the same is true.

A look at the first chart below depicts silver on a monthly basis along with a 12 month moving average (MA).

To the extent that long-term MAs represent trend, the trend of silver appears to be decidedly down and negative.

As such, until silver can reclaim that MA to the upside and/or the same MA becomes positively sloped, one would think there are downside risks to this metal’s price.

From a timing and execution standpoint, the weekly chart below suggests that should silver break and close below line (1) at the inset this week at the inset of (A), that the risk of hard and fast downside could rise significantly with trend-line support being ~35%-40% below current prices in the $18.50-$19.50 range at line (2).

Lastly, note that through silver’s trading history aggressive moves from choppy consolidation patterns have tended to be the rule, not the exception, and that the best moves the metal has ever made either up or down have tended to come when such patterns complete themselves.

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