Chart of the day: Silver slide in store
Remember the Rule of Eight. This postulates that any financial instrument that has moved in one direction only for eight to 10 consecutive periods has a mature trend and is due for a correction. This is precisely the case for spot silver, where prices rose for nine consecutive weeks, retracing half of the previous decline, then stalled and stumbled badly last week. Peaking at US$18.48 per ounce, just above the 200-day moving average, it has now dropped below the 50-day one, meaning it remains decidedly bearish. Therefore, aided by momentum, which looks set to turn bearish, we favour a drop back down to December’s lows of about US$15.65 and probably secular support at about US$14.70.
Nicole Elliott is a technical analyst