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Silver Trend Forecast: Sellers Remain In Control

ByAnna Coulling
Published 12/20/2012, 07:28 AM
Updated 07/09/2023, 06:31 AM

Silver futures sold of sharply once again yesterday, with the March contract closing at $31.115 per ounce on the day, and ending with a wide spread down bar, adding further downwards momentum to an already weak market. This bearish sentiment was much as expected, and indeed I suggested that we would see a test of the $31 per ounce region in due course, following the breakout of the recent sideways congestion in the $32.50 to $33.50 per ounce region.

daily silver chart for silver futures
This area was duly breached on Thursday, and with an isolated pivot high in the $33.80 per ounce area, this is driving the metal lower, as we now approach another key point – the isolated pivot low at $30.70 per ounce. This triggered a recovery and bounce higher in early November, and is therefore a key point on the daily chart. If we do see a clear break and hold below this price, then expect to see the current bearish trend develop further.

Moving to the indicators, on the daily chart, the sellers have been in control for several days, and with rising selling volume on Tuesday and Wednesday, this is validating the move lower. However, the daily volumes themselves are below average, due to the end of year factors, coupled with uncertainty surrounding the ‘fiscal cliff’.

The three day volumes reflect a similar picture, with the buyers having withdrawn from the market since late November. However, it is interesting to note that the three day trend remains bullish on this timescale, and has yet to transition to a congestion phase or to bearish. If either of these does occur in the next few days, then expect to see silver prices push lower once again, and follow gold which is also heavily bearish at present.

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Latest comments

To answer second part of your question - if fiscal cliff resolved then traders & investors will move back into riskier assets such as equities & out of gold.
You also have to remember that silver is not considered a precious metal but is classified as an industrial metal. So, when economy is doing well silver prices will increase. In addition, with gold so high many are turning to silver as an alternative.
One of the major confusions i have is.. if the fiscal cliff issue is resolved will it lead to a rally or a downfall in gold silver prices.. rally because some sites say it suggests growth in economy.. and downfall because the safe haven ideology gets defied... and some also suggest that actually silver and gold will behave inversely.. i.e if fiscal cliff resolved silver will rally but gold will fall.. and if not resolved gold will rally while silver will fall as its an industrial metal linked to economic growth..
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