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Silver Prices: Long-term Support Zone in Focus, Gold Teetering

Silver Prices: Long-term Support Zone in Focus, Gold Teetering

What’s inside:

  • Silver prices break eyed lower trend-line, but…
  • Remain in major support zone
  • Watching gold closely as it breaks important trend-line, but sits at support around 1300

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On Wednesday, when we last discussed silver prices, we were sticking with our base-line scenario of seeing the trend-line off the July spike high and August low continue to converge before soon seeing a material breakout.

To end last week, silver was looking solid until it had a sharp intra-day reversal, which carried over into Monday. Selling pressure pushed silver below the lower trend-line on a daily closing basis, which is forcing us to adjust.

We noted on Friday that silver could break below the lower trend-line and all wouldn’t be lost on the bullish case, but we would need to make an adjustment to our base-line scenario.

The break helps clear a path for lower prices in the short-run, but overall silver continues to sit within a major support zone dating back to bottoms created in 2013/14, 2015 peak, and the summer low.

We will respect support as long as it holds. On a break there is one more last line of defense for intermediate to long-term longs at the trend-line rising up from December. But for short-term traders the path lower would be cleared for trades from the short-side of the tape.

One alternate scenario which could still make for a clean set-up, but will require time to develop, is a descending wedge. The top-side trend-line would remain while a flat bottom forms around 18.50. This is only a tentative scenario at this time, but one worth keeping in mind should it unfold.

Silver: Daily (Weekly)

Created in Tradingview

Keeping an eye on gold;the metal is teetering around the important 1300 level after dipping below key trend-line support from December. Gold needs to soon turn up if momentum isn’t to kick in to the downside. A break of both the trend-line and 1300 level could spell significant trouble. If this is the case, then silver will likely find it difficult to hang onto the 2013 – present support zone, and could quickly trade down to the December trend-line.

Gold: Daily

Created in Tradingview

Precious metals are in a precarious position at the moment, but a quick turnaround from current levels could quell the notion we see prices move much lower from here.

To find out where our team of analyst think various markets – FX, commodities, and indices – are heading during Q4, check out our free trading guides section.

---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.