Although it touched a low of US$26 an ounce, it also formed a long legged hammer, a bullish reversal signal which was confirmed as its price recovered. I said that the white metal was oversold and that a rebound was likely in Silver: Bouncing off the 100dMA.
Silver's price has been forming higher lows since my last blog post. In the last two sessions, it broke resistance provided by the 20dMA and this MA was successfully tested as a support in the last session. A resistance turned support. This is what long holders are looking for before adding to their positions. Indeed the rising MACD shows improving momentum although still in negative territory.
Further improvement in the price of silver is likely to meet resistance at US$37 an ounce or so. That is where we find the confluence between two declining MAs, the 50d and the 100d. Of course, price could turn south as well although the probability of an upside is somewhat better. Technical analysis is about probability, never certainty.
