Silver: Bouncing off the 100wMA.

Silver is currently at US$31.28 an ounce. I hear some people saying that if silver should go under US$30.00, we should cut short our long positions. I don't like to sell when prices are forming new lows. I like to sell on rebounds.

Silver did touch a low of US$26.00 an ounce but a long legged hammer formed on the daily chart. This is a bullish reversal signal. Although the MACD is plunging into negative territory, the RSI is now in the oversold region, something that has not happened in a long time.

Momentum is negative but the drop has been fast and furious. Such an aggressive drop is often followed by an aggressive recovery. The RSI suggests that currently the white metal is oversold and a rebound is likely.

On the weekly chart, momentum is still positive and it is quite clear that price bounced off the 100wMA at about US$26.00 an ounce. We could probably expect some resistance at US$34.44 an ounce which is where we find the 50wMA.

Related post:
Silver: Accumulate or wait and see?