Spot Silver Prices - Daily Candle Chart 27th February 2009

Spot Silver Prices - Daily Candle Chart 27th February 2009

Spot silver prices fell along with spot gold yesterday losing 51 cents and closing well below the 14 day moving average. The move was a reaction to an improved view by the market for equities which translated in less safe haven buying together with the disappointment for not pushing towards the $15.00 level. Prospects of a reduced inflation plus expectations that banks will be provided with sufficient funds could hurt silver along with gold, in their roles of providing a hedge against inflation and an alternative safe haven for investors. As you can see from the spot silver chart for today, I have expanded the scale in order to show the support line at $13.75 which has now been penetrated, which is a worrying signal in the short term. Has this held on Tuesday, then we could have expected a bounce higher from this level, but we must now wait for a reversal signal in the charts, before we buy back into the rally. As I have said many times before, spot silver will generally outperform gold in any bull rally, but in any reversal the opposite applies, so we need to be cautious in our trading and be patient. My long term view of silver remains unchanged and I believe will provide excellent returns over the next few months. The short term rally in equities, is just that, I believe, as the market conditions remain unchanged with truly appalling economic and company news being reported on a daily basis. So for today, I would suggest we wait and see, as with the weekend ahead, many traders will be squaring their positions, and we should see this reversal as an opportunity to look for buying signals, to re-enter the market as soon as we have a clearly defined reversal.

The short term trend is sideways while medium and long term trends are bullish.

Support:    $12.910 (yesterday’s low)                                   Resistance: $13.875 (9 day moving average)

Support:    $12.730 (low of 10/02/09)                                   Resistance: $13.760 (yesterday’s high)

Support:    $12.393 (40 day moving average)                             Resistance: $13.727 (14 day moving average)