Technicals | Aug 15 2006
By Rudi Filapek-Vandyck
Technical chartists at Barclays Capital believe investors should be prepared for further weakness in the spot price of silver. The metal showed a "strong snapback" on Monday, but that hasn’t altered the chartists’ view.
The main reason for concern, the chartists report, is the fact that silver has now repeatedly failed to overcome channel resistance. The subsequent close below the 100 day average plus what the chartists call "bearish divergences in the daily momentum oscillators" are all seen as factors supporting the view that the short term outlook is for further weakness.
On Barclays’ analysis, downside targets are at the US$11.17/oz channel lows.
Silver bulls need a daily close above Fibonacci resistance which is situated at US$13.01/oz. If the metal achieves this it would suggest a more sustainable uptrend is in place than the chartists are taking into account at this stage.
