This post was originally published on this site
(Source: TC2000.com)
Before this week’s sell-off, silver continued to act very well within its base-on-base pattern and was following what looked to be a similar analog to 2004-2005, with two higher lows in a base-on-base pattern, and a major breakout that followed. However, with silver breaking down below its prior low near $24.00/oz, this pattern has morphed and has increased the probability of retesting the low of this consolidation area at $21.70/oz. The silver lining is that the metal remains above its key monthly moving average (white line), keeping silver in a bull trend for the time being. Having said that, a breakdown below $22.70/oz on a monthly close would be a negative development, with a breakdown below $22.00/oz being a significant red flag. So, while the bulls are hanging in there, for the time being, further weakness without immediate buying support could become an issue.
