Silver (daily chart shown above) has continued its extreme plummet as the U.S. dollar rally continues to weigh down most commodities. At the end of last week, price collapsed below the $16.80 support level and now if the bearishness continues, the next key support level lies around the $14.00 zone.
Price action on the weekly chart displays the invalidated bullish butterfly pattern and highlights the relatively strong downtrend that has been firmly in place since mid-July highs. In the process of this slide, we have not seen many extended periods of consolidation. If price is able to recapture the $17.00 level, we may see a tentative rebound.
The trade: Sell Silver at $16.12 with a stop loss at $17.12 and a take profit at $14.12. The Risk/Reward Ratio is 1:2.
Edward J. Moya
WorldWideMarkets Online Trading