Technical Analysis – Silver recoups some losses after the plunge to 11-year bottom

Melina Deltas, XM Investment Research Desk

Silver prices have gained little over the last couple of sessions, holding above the eleven-year trough of 11.60 that was posted earlier this weekHowever, the 50-day simple moving average (SMA) is in the process of creating a ‘death cross’ with the 200-day SMA, confirming the steep decline in the preceding days.

Regarding the near-term technical viewpoint, the stochastic is pointing marginally up in the oversold territory after the bullish cross within its %K and %D lines. Also, the RSI is moving higher beneath the 30 level, indicating a possible pull back.

Immediate resistance is coming from the 23.6% Fibonacci retracement level of the down leg from 18.90 to 11.60 at 13.30. Marginally above this level, the 13.70 and the 14.26 resistances could apply some pressure ahead of the 38.2% Fibonacci of 14.38, which coincides with the red Tenkan-sen line of the Ichimoku indicator. Even higher, the commodity may flirt with the 50.0% Fibonacci and the blue Kijun-sen line at 15.25, recouping the previous Friday’s losses.

On the other side, a plunge again could meet strong support at the 11.60 – 11.80 zone, which encapsulates the eleven-year low, before plummeting to the October 2008 low of 8.44.

Summarizing, the tumble from the 17.60 resistance shifted the neutral outlook to a bearish one in the short- and medium-term timeframes.