Silver Forecast October 8, 2014, Technical Analysis

The silver markets initially tried to rally during the course of the day on Tuesday, but found the $17.60 level to be a bit too difficult to overcome. Because of that, we turned back around and formed a shooting star and it appears that the market is probably going to see more selling ahead. Ultimately, we do see a significant amount of resistance all the way to the $18 level, and it’s not until there that we would be comfortable even beginning to anticipate buying silver.

Keep in mind though that we are buying small amounts of physical silver as we drift lower. But that’s not a trade, that’s an investment and one that has absolutely no leverage attached to it. This is more or less a retirement type play, as we don’t know exactly where the bottom will be, so we wanted trying to “average down” our price when it comes to our silver holdings.

That being said, we do believe that the market will find support below, somewhere closer to the $15 level, and as a result we feel that a break below $17 probably build up enough momentum to finally break down and go even lower. The $15 level below should be supportive, but at the end of the day the real support seems to be found closer to the $12 level based upon longer-term charts as the $15 level is minor overall when it comes to the weekly chart.

Demand for silver continues to be fairly weak, especially considering that industrial production is relatively soft around the world. Remember, even though that the silver markets are considered a precious metals market, they are also an industrial metal, which means that they have both potential drivers, the US dollar and the economic health of world economies. With that being the case, we feel that this market will continue to go lower, and even if you are a short-term trader, you will find opportunities to short this market again and again as it certainly has no real fundamental or technical reason to go higher at this point.