TECHNICAL UPDATE: HOW FAR CAN SILVER FALL?

Silver futures have been in a bear market for quite a while now. They have traded relatively weak versus gold and have failed to really make any rally efforts of any consequence since mid-2013. Right now, based on the weekly chart, technicians say silver appears to be in the latter stages of a massive “ABC” correction to the downside with an “optimistic” target of 16.433 (from 18.60 early Friday morning). Silver is oversold short-term, though, and counter-trend rallies can occur under such conditions. However, the technical crowd says that those rallies are to be looked at as opportunities to sell until the downside target is approached or tested. Technical sellers will be waiting for any such rally that takes silver to overbought conditions on the daily chart. Once that overbought condition is reached (using the %R indicator), they will identify the closest resistance (as a gauge for where to place their protective stops) and then make their bearish bets. The closest such technical resistance level comes in at 18.965.