Silver: Selling pressure eased.

The selling pressure experienced by silver has eased. Candlesticks in the last three sessions closed above the 100dMA with those in the last two sessions forming long legged spinning tops. These could act as reversal signals but they need confirmation.

The technicals are benign and encouraging. The MACD is closing the distance with the signal line in negative territory. We could see a bullish crossover in the near future which could signal a rebound. If this were to pan out, watch the resistance provided by the 50dMA which is now at US$38.98. That prevented price from moving higher as it rebounded from the recent rapid decline. Market participants are likely to remember that and, so, the 50dMA would be a significant and immediate resistance level.

Am I buying more silver at the current levels? Well, we could see a rebound in price and it might be a good idea to add to my position just in case it happens. This would be for a quick trade which means selling if the 50dMA should be retested. However, I am more a longer term holder and I am not convinced that the 100dMA is a strong support now. Why?

See how the 100dMA has been broken in so many recent sessions? It could be a matter of time and this could take months but we could see the 200dMA finally called upon as support. The 200dMA is a long term support and if it does not break, generally, it would provide a more secure entry point.

This strategy is a sound one for me because I already own silver bought at a much lower price. I am in no hurry to add to my position unless I get a firmer sign that things have stabilised for the longer haul.