Spot Silver- Weekly Outlook for February 3rd 2014
Spot silver closed the week lower at $19.10 a troy ounce, down 3.82 percent, week on week. The precious metal opened the week higher at $19.90 a troy ounce, scaling above $20.00 for the last time during the week, before erasing its gains to close at the lowest levels since July last year. The precious metal has been oscillating between $19.00- 20.50 for the last ten weeks, rebounding after testing breakouts in both directions.
For the month of January this year, silver closed in the negative by about 1.6 percent, extending its monthly losses to three in a row and after slumping more than 35% last year.
Silver futures for March delivery trading on the Comex division of the Chicago Mercantile Exchange (CME) closed at $19.12 a troy ounce, down 3.24 percent for the week.
The week ahead
Spot Silver erased early gains on Friday to close almost flat for the session. The precious metal closed the second successive week and the last four out five sessions with losses. Prices are holding near crucial supports at $18.90- 19.00 a troy ounce; breakouts for the symmetrical triangle in a downtrend. A close below these supports and prices could slump to $16.75- 17.00 a troy ounce very quickly; bottom end of the bearish channel connecting the lows of October and December last year.
Crucial near term resistances placed at $20.20- 20.25; top end of the bearish channel with trend lines plotting the highs of September and October 2013. A close above and we could see a short term rally to $23.50; long term breakouts, although the possibility remains very low.
The medium to long term view for the precious metal is highly bearish and a close below $18.90 would confirm the bearish breakout, with medium term targets placed at $12.00- 12.50 a troy ounce, last seen in April 2009.
For the week, short silver on rallies from $20.20 up to $20.30 a troy ounce. Shorts can also be initiated at around $12.75- 12.80 a troy ounce. However, if prices close above $12.50, reverse all short positions for price targets of $23.00- 23.50 a troy ounce.
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