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.
In addition, volatility has normalized and trade volume has retreated, suggesting consolidation. 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.
Murphy & Co’s Silver model currently holds a short Silver Futures (symbol: SI) position from the $20.73 level.