What’s inside:

  • Silver price at confluence of resistance
  • Good risk/reward around current levels
  • Targeting 2003 trend-line under 15

What fundamental factors are driving precious metals this quarter? See our Q3 Forecast.

When we last looked at silver prices on Thursday, this is what we had to say: “We’ve seen one bounce already in the near-term downtrend turn lower and the bounce we are seeing now, while a bit more powerful than the first bounce, still smacks of corrective price action, not of a low. We’re coming up on the low from May as resistance in addition to the trend-line off that June 6 peak.”

Both of these technical events are in the same vicinity, or in confluence. As far as low-risk entries for fresh shorts, this is an attractive spot from where we sit. Not that rising up beyond the technical crossroad would mean silver is going to continue to rally, but whenever you have two angles of levels (resistance in this case) to lean on for risk management purposes it makes for an appealing situation. If silver ‘shows no respect’ by turning lower from very near current levels, then shorts can cut their losses quickly and reassess. If silver turns down there is a good distance to the next major levels of support.

First-off, the recent low at 15.14 could provide support, but our interest lies at the 2003 trend-line we’ve been discussing recently (it’s only about 30 cents below the 7/10 low). At 14 years and counting, it’s a big-time trend-line. If we see silver decline and test this long-term form of support it is unlikely the price action will be anything but clean on a daily basis. Should we see a move develop to the trend-line we’ll dial back to weekly time-frame to determine whether it is holding or not.

All-in-all, silver is at an attractive spot to look for weakness to renew towards what could be a major long-term inflection point.

Silver Futures: Daily

Silver Price Weakness to Renew at Confluence of Resistance

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---Written by Paul Robinson, Market Analyst

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