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Silver future analysis – 26th October 2010

silver future analysis

Silver Futures - daily candle chart 26th October 2010

December silver futures recovered some of the lost ground of last week, closing yesterday’s commodity trading session with a narrow spread up candle, with a small wick to the upper body, closing at $23.55 per ounce and just failing to hold above the 14 day moving average on the daily chart. The key feature of yesterday’s price action for the commodity, was the short term resistance presented by the 9 day moving average which provided a temporary barrier to the high of the day, suggesting that we may see some further short term bearish sentiment as a result. Indeed this has been confirmed in trading this morning, with silver futures moving marginally lower at $23.28 per ounce, down $0.26 per ounce on the day so far, and trading back below the 14 day moving average once again, with the 9 day moving average presenting a technical price barrier to the attempt to move higher.

As such, the short term outlook now has a mildly bearish tone, but the longer term trend remains firmly bullish, provided the current short term retracement does not develop into a longer term pull back. This seems unlikely at present, and the $23 per ounce level will prove to be key in this respect, as this price region should provide the requisite support if we continue to probe lower. The key for the next few days will be whether silver futures break and hold back above the $24 per ounce level, and if so, then this will provide the platform of support required to see the metal recover the bullish momentum once again, and retest the $25 per ounce high of two weeks ago, which will then see silver move towards our end of year target of $26.50 per ounce in due course.