Silver broke down last week.
After declining for almost three years, the metal finally looked like it was
ready to make a bullish move in April.
But instead of breaking out, silver fell below $19 per ounce last week. And it has some precious-metals bulls wondering what to do now...
Silver broke down below its support line at $19 per ounce late last week. Now it appears headed toward its next support line at about $18.50.
That's not a lot of potential downside from here. So longer-term investors can sit tight and wait for this short-term downtrend to run its course.
But traders should now be out of their earlier positions and waiting for a better setup to develop before buying again.
Here's when traders should look to get back in again:
| • |
If silver falls to support at $18.50, traders can buy the metal and bet on a bounce off support. They can exit the trade for a small loss if support fails and silver drops below around $18.40.
|
| • |
If silver reverses last week's breakdown and rallies back above $19 per ounce (the former support line that is now resistance), it would eliminate the current short-term bearish look of the pattern... and put silver back into a bullish position. This sort of "fake-down" occurs often in the precious-metals market. It serves to shake investors out of position before reversing trend. Traders should buy silver if it runs back above $19 per ounce.
|
| • |
If silver falls to support at $18.50, bounces, and then declines again to form a higher low, traders can buy silver at the "higher low." That's the first step in establishing a new bullish trend and it sets up the potential for higher prices. |
Last week's breakdown in silver was disappointing for precious-metals bulls. Traders should be on the sidelines for now. But the game isn't over. There are several ways silver can set up for a new bullish trade. Keep an eye out for them and be ready to buy.