CFDs: Silver price bounces but chartists see further drops in store

on Mar 10, 2014
Updated: Oct 21, 2019

**, Monday 10 March:**

Early in today’s Asian session, silver fell to a 25-day low at $20.59 but since then the precious metal has found support around $20.58, the 50 percent Fibonacci retracement of the upswing from $18.98 to $22.16.
A subsequent retest before the London open produced a marginally higher low at $20.601. That hesitation has proven to be a sufficient reason for the bulls to lift their game and push the silver price to an intraday high of $21.05, reached midway through the European session.

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The 38.2 percent Fib of the downtrend from $25.097 to $18.498 at $21.009 has so far limited the commodity’s upside. The 200-day Simple Moving Average is currently hovering around $20.963, while the 100-day SMA is in the vicinity of $20.504.

In their latest weekly note to clients, analysts at TD Securities write that silver “should continue to correct lower”, after having stalled right on the measured move target ($22) from the December/January double bottom breakout above $20.50. In addition, the analysts point out, the rally lost steam as the price approached “trend resistance off the 2011 peak, forming a bearish weekly reversal signal in the process” (see left chart below).

“Silver should see some support around 20.20/50 and below here, there is a clear risk of a return to test more important, long-term support just below 19”, projects TD Securities. “Trend momentum is weak across a range of timeframes at the moment (favouring range trading, rather than a move to new cycle lows) so losses should stabilize in the 19 area near-term.”

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__Speculators start building short silver positions at the dawn of March__
Speculators increased their bearish silver bets and pared back bullish wagers in the week to 3 March. The net long non-commercial position in silver dropped to 27,000 from 30,000 (see right chart above), according to the latest Commitment of Traders report from the Commodities Futures Trading Commission, released on Friday last and covering data for the week to 3 March.
Right now, silver is trading at around $20.981, up 0.56 percent intraday.


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Silver Commodity Precious Metals