Silver Rebounds, But Stays in a Downtrend

After hitting 14.28, its lowest since December 3rd, silver rebounded and traveled somewhat higher to challenge the 14.47 level yesterday. The metal slid thereafter, but found support near 14.35 today, and slightly bounced again. That said, despite the latest recovery, the price structure on both the 4-hour and daily charts continues to be of lower peaks and lower troughs below the downtrend line taken from the high of March 21st. Thus, we would still consider the near-term picture to be negative.

The price could continue traveling higher for a while more, perhaps to challenge the 14.47 level again, or even trade a bit higher. However, as long as it stays below the downtrend line, we would still see a decent chance for the bears to jump back into the action and aim for another test near 14.28, which is Tuesday’s low. A decisive dip below that hurdle would confirm a forthcoming lower low and may pave the way towards the 14.20 zone, defined by the low of December 3rd.

Shifting attention to our short-term oscillators, we see that the RSI, although below 50, has rebounded and now sits slightly below that equilibrium barrier, while the MACD, also within its bearish territory, lies above its trigger line. Both indicators detect slowing downside momentum and corroborate our view for some further recovery before the bears decide to take charge again.

In order to start examining whether the short-term outlook has turned positive, we would like to see a clear break above the 14.60 area. Something like that would confirm a forthcoming higher high and would also bring the white metal above the aforementioned downtrend line. The bulls could then get encouraged to drive the battle towards to the 14.73 area, the break of which may allow extensions towards 14.84, a resistance defined by the highs of May 14th and 15th.

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