Silver back to knocking on the door of chart resistance again

This is a rather remarkable price chart and what can only be called remarkable price action on display. As you all know by now, silver was absolutely obliterated yesterday resulting in the total erasure of the huge breakout rally from Tuesday. Such occurrences are very uncommon from a purely technical analysis perspective. More often than not, such a breakout will see some initial profit taking followed by another burst of buying as momentum based buying kicks into high gear.

To witness a market completely undo such a breakout on massive volume  and then to experience only minor additional downside pressure is also something that one rarely sees. We are getting a bird’s eye view of something akin to a Supernova in the sense of its rarity.

Silver bounced right off the former resistance zone near $34 noted on the chart and has now returned directly to the same exact resistance barrier that held it in check prior to this Tuesday’s breakout ($35.50).

I have to say that if the bulls in this market can blast through this $35.50 – $35.70 level once again and prevent an intraday dip back below this level, those same shorts that rammed it down yesterday once they capped it at the highs, are going to be shell-shocked and that is putting it mildly. Once again you can see how critical this former resistance barrier is on the charts.

Author: Trader Dan

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing