Silver – Price action on silver (a daily chart of which is shown) as of Thursday (5/05/2011) has dropped precipitously for five consecutive days from near its $50 area all-time high to hit a low just above $35. This deep correction follows a steep run-up that was in place since late January. The bearish correction has taken price down to the 61.8% Fibonacci retracement of the last major bullish trend run from the late January low around $26 to the April all-time high just shy of $50. In the event of a strong breakdown below this key retracement level, the current drop could become more than just a deep correction within the bullish trend. Downside support in the event of this breakdown resides around the $31 price region. An upside trend continuation move could potentially occur if price rebounds and breaks out above $41 resistance.

Edward J. Moya
Market Strategist, FX Solutions

FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)