The chart of silver may be depicting a buying opportunity with limited risk and a tight stop. Silver is in a down channel, but the current price may be suffering from an oversold condition. The market has seen this movie before. Silver saw a similar slump in December of 2012 where the metal fell over 10% as it traversed from the upper bound of the channel to the lower bound of the channel. The candlestick formation when silver bottomed during the aforementioned period is eerily similar to the ones at the present time. See chart below for specifics, but in essence, they are forming neutral dojis…an early indicator of a bottoming process.
Other drivers of the metals trade include push and pulls from the currency market. Over the same period mentioned above, the US Dollar index has rallied and the EUR/USD currency pair has fallen, giving more reason for the metal weakness. This may soon cycle back to prior levels, but is absolutely a risk to the outlined thesis.
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