Silver Spooked at 50.00 and Reverses Sharply

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April 26, 2011 - Silver Spooked at 50.00 and Reverses Sharply

Simple Moving Average ( SMA ) 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Fibonacci Study
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance
Multiple Time-frame Analysis

Silver (XAG/USD)
silver 4/26/2011
Short-term
- Silver started the week with a sharp rally towards 50.00 . A sharp spike occurred as the market attempted to test this psychological barrier.
- The ensuing decline has been sharp and broke below where the market closed at the end of last week. The decline has so far achieved 50% retracement.
- Despite the sharp reversal , silver retains bullish momentum with RSI reading staying above 40, and price action is still above a rising trendline .
- Although there is no bearish momentum in the medium term, and price action has yet to confirm the reversal , we should expect the market to try to contain silver below 50.00 ahead of the FOMC meeting this Wednesday.

Silver daily chart 4/26/2011
Medium Term
- If the market closes today's US session below of  the 45.00 level (lowof the most recent bullish candle), then silver should be in a reversal the combination of the spike and a strong bearish candle suggests at least some follow through in the shor-term. A test of the 43.60 level seen in the daily as 38.2% retracement, and the 4H chart as 61.8% retracement is an important shor-term support .
- Below that, we might correct towards 41.70 , 78.6% retracement in the 4H chart, and 50.0% retracement in the daily chart.
- Notice that this medium term decline is contained above 40.00. 61.8% retracement, a break below which then signals a reversal towards the 31.25-32.00 area.
- On the upside, clearing 50.00 opens up short-term target between 51.50-53.20 (150-161.8% expansion of 2010 rally onto 2011) and a medium term target near the another psychological barrier at 60.00 (200% expansion).

Will this week's FOMC meeting change the course for the USD and the precious metals? We would love to hear from you. S ubscribe and become a membe r to share your views and join live discussions as well as webinars about the markets.

Fan Yang CMT
Chief Technical Strategist
FXTimes

 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

Referenced Stocks: SMA

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