Silver - BUY

Current Level: 11.96

Observations on the daily chart: After consolidating between US$ 14 and US$ 19, prices of Silver have fallen below this range. Silver prices are currently trading just above a support area and there is likely to be buying interest between US$ 11.6 and US$ 10.6

Observations on the Ichimoku Cloud: SILVER prices are trading below the cloud. The long term and short term indicators confirm that SILVER prices are in a downtrend.

Observations on the momentum oscillator: The momentum indicator is trading well below the 100 level. This indicates that the momentum is in the direction of the downtrend in prices.

Observations on RSI and Stochastic Oscillators: Both oscillators indicate that SILVER prices are deep in oversold territory. With sharp fall in prices, it is possible that the indicators may stay in oversold territory for an extended period of time.

Summary: SILVER prices are in a downtrend. After consolidating in a range of US$14 to US$19, the fall in prices from this range indicate a price target of US$ 9, unless there is a weekly close US$14. If the downtrend continues, it is likely that prices are not going to head to US$9 in a straight line. There is likely to buying interest in the area of US11.6 and US$10.6.

It is possible that the trend may reverse suddenly, strict stop-losses should be maintained.

Resistance levels for SILVER: US$14 (+16% from current level)

Support Levels for SILVER: US$ 11 (-8% from current level)

Trade Idea:

Scenario: An Investor is considering entering the markets at this time (The funds allocated to the trade represents only a small portion of the overall portfolio / net worth).

Position: BUY

Entry Level: Buy in 2 parts: 1st @ 11.5 and 2nd @ 10.5 (Average buy price at 11)

Target: US$ 13.7 (+24.5% from average buy price)

Stop Loss: Weekly close below 9.9 (-10% from average buy price)