Silver futures (symbol: SI) have experienced a large, yet choppy, sell off from its $49.82 high of Apr11. The movement down to $18.185 in Jun13 represents a 76% retracement, a common retracement target. The Jun13 retracement also tested, and failed to penetrate, the long running downtrend line from the Apr11 high.
The first major downtrend line on the chart below created an apex of support at the $18.185 level in Jun13. A second, bolder downtrend line has been drawn to reflect the breakout potential which forces a silver decision before the end of Sep14.
Consolidation could be complete at the $18.185 level. Failure to hold the $18.185 level suggests a test of the $8.40 low from Oct08. Successful support at the $18.185 level suggests trade back into the $26-36 range, with stiff resistance expected at the $26.50 level.
Murphy & Co’s Silver model currently holds a short Silver Futures (symbol: SI) position. To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/.