The long-term outlook for silver is very positive indeed, but over the short to medium term it looks set to react, says technical analyst Clive Maund.
by Clive Maund
The Gold Report
On its short-term 3-month chart (below), we can see that, after rising sharply late last month, a sizeable bearish “shooting star” appeared on the chart on heavy turnover at the start of this month, at a time when silver was critically overbought, which indicates a high probability that silver will react back soon.
[…] On the 6-month chart we can see why silver might react back here—it has just arrived at the top of an expanding uptrend channel in a very overbought state. Thus, a reaction back looks likely, and this would be a healthy development that sets it up for the next up-leg. Given the current COT structure it would not be unreasonable for it to drop back to the support shown in the $18 area over the short- to medium term.