The Silver markets make for interesting trading as they go through periods of price consolidation before we see large movements. It looks like we are seeing this pattern repeat itself currently.
Recently the big movements have been bearish, which has led to the formation of a bearish trend, while the consolidation patterns have allowed scalping traders to play the range. The strength in the US dollar and the prospect of tapering ending and interest rates rising has led to metals falling out of favour with investors. This can be seen in gold threatening the $1200 level and silver holding above $17 an ounce.
At the moment we have some consolidation in the price of silver between $17.93 and $17.33. The current shape is a pennant which is likely to lead to a bearish breakout around the low $17.40s region. This will be the first breakout as there is heavy support at $17.33, and if this breaks down it is possible we will see $16.50 as the next level of heavy support.
The price of silver has been consolidating in a scenario that has repeated itself as it trends down. Look for a breakout through $17.33 to take the price towards the mid-$16 range.