Silver Price Analysis: Break below key support is a bearish development
- Silver breaks below key support flipping the trend bearish.
- The Measured Move that formed has now completed with a stunted wave C.
- More downside is favored to a target at the May 2 low.
Silver (XAG/USD) has broken below key lows in the $28.60s, reversed trend and extended its decline.
The precious metal had been rising in what looked like a Measured Move (MM) pattern, with a C wave that extended substantially higher towards a target in the mid-$34s, however, after rallying up to a peak at $31.76, Silver capitulated and came tumbling down.
Silver Daily Chart
Silver’s break below key support at $28.67 was a significant turning point in terms of the trend and now means the commodity is probably in both a short and medium-term downtrend. Since “the trend is your friend” the odds favor a continuation of this downtrend lower. The MM that was forming seems to have completed with a stunted wave C.
The next target lower is at $26.02 (May 2 low), with the 200-day Simple Moving Average (SMA) just a little below at $25.85 also likely to provide support.
The Relative Strength Index (RSI) momentum indicator is not yet oversold suggesting Silver has more scope to fall.
Author
Joaquin Monfort
FXStreet
Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.
