Silver: 38.2% Fibonacci Retracement Capped Dead Cat Bounce
May 11th, 2011Warning: This is not a recommendation to buy, sell or hold any financial instrument.
The difference between the 38.2% Fibonacci retracement level and the high on the candle was just 4.8 cents. Man, that thing weirds me out sometimes.
Spot Silver, Daily Interval
Here’s the post where I mentioned the retracements on this large move down.
So, what’s next?
I don’t know. The Magic 8 ball is pretty blurry now, but here are some guesses:
Short term (days to weeks), I see the technical picture as having more bearish arguments than bullish ones. The full weight of the unwinding weekly stochastic slow is bearing down on it now, and the dollar bounce is continuing.
Here are some weekly support levels to watch on silver. A breakdown of $33.05 opens to the door to $31.23. Next would come $26.37, and if that holds, it will probably form the right shoulder of a head and shoulders pattern—but that’s getting way ahead of the market. $33.05 has to go first.
Spot Silver, Weekly Interval
I put the 50% retracement at $32.20 (move spanning the low from the Feb 1 2010 weekly candle to the high on Apr 25 2011). So, bears, watch out for that range between about $31.20 to $32.20. There’s a trendline coming up and the 50% fib fan line (not on the chart) is around there as well. Bottom line: If they’re going to light off a short squeeze, $31.20 to $32.20 would be a good place to do it.
