Since October 2008, silver has formed an ascending wave which continued until November 29, 2009. We see on the weekly chart below that it created a bullish channel that organized these upside moves from $8.48 per ounce and topped out at 19.44 areas. We notice on the provided chart that a negative divergence has appeared, giving the impression of moving negatively with the start of 2010.
As we see on the secondary image, a classical bearish pattern has been captured, supporting our technical suggestion that the metal changed the direction. The aforesaid negative pattern might be capable of pushing the metal downwards further more.
A break of 17.15 added further confirmation to the highly anticipated bearish wave, targeting the pivotal support levels between 14.85 and 15.00 zones.
In its way to the downside, silver will be facing a very solid support level at 16.20. This level represents the most important level over short and medium term basis as it represents areas for previous recorded highs and bottoms, or rather strong resistance that turned into key support. A stable move below it will ignite a panic selloff during the first quarter of 2010.
