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Today’s Trading Edge: Silver’s Slide Rests On Major Support

Posted by Edward Moya on Aug 25, 2014 7:59:00 AM

WWM SILVER AUG 25 2014

Silver (daily chart shown above) has been entrenched in a relatively strong downtrend since mid-July highs.  In the process of this slide, multiple key technical support levels have been breached, including the psychological 20.0 handle and 200-day SMA. 

While gold prices have benefited from geopolitical tensions, silver has not seen much of a safe-haven bid this summer.  The strong U.S. dollar is also weighing heavily on all precious metals.  The sharp drop may find major support around the 2013 low price of $18.17.  Further support may target the $17.26 level which is the 78.6% Fibonacci retracement of the rally from the 2008 low to record high of $49.82.  

Oversold conditions persist and if Silver can maintain the key recent range of $19-$25, traders should not be surprised if we see a decent bounce in prices.  Any significant rally above $22.00 could confirm the end of the downtrend, with an initial upside target potentially around the $25 handle. 

The trade: Buy Silver at $19.10 with a stop loss at $18.10 and a take profit at $21.10.  The Risk/Reward Ratio is 1:2. 

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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