SLV had a monster run in the first half of 2011 after breaking above $20 which was followed by a huge down move after topping out at $48.35 in late April/early May. SLV was the focus of most traders at that time.
Below are links to some of our various videos talking about the climatic top to sell/short (watch these for Educational purposes)
Record Volume in Silver and Closed Off Highs, Correction or Pause?
Silver's Short-Term Bubble: Trader
This is the link to the CNBC video where we explained the technical’s of the Silver Bubble.
The down move from $48 down to about $33 has controlled this stock before another breakdown occured in late August/early September, putting in a low of $27.41, which was the new reference point for traders. The bounces in SLV became weaker and more shallow in time and in the past 3 months, SLV has been hovering on the lower third of its yearly trading range as it lost support of all key moving averages. $32 became a key level that it was not able to trade above as of lately.
This stock was trading in a bear flag pattern on both the daily chart and the weekly chart, giving traders more conviction on the break below the recent low of $27.14. The chart of SLV has been broken for sometime and will take time to repair.
This morning, if you were prepared, SLV gave the momentum break though $27.41 and sent the stock lower. SLV is currently down over 3.5% and has room to go lower still before it hits bigger support areas. Support 1 in SLV is $26.20/$26 and if that doesn't hold, Support 2 is around $22.50.
One caveat to this trade, it will be important to see how SLV closes. A close below the key level of $27.41 will keep the pressure and momentum to the downside, however, a close above this level will make the trade a little more tricky as the momentum to the downside would slow down. For now, the quick and easy part of the trade has happened, but the longer SLV stays below $27.41, the more likely lower prices will follow.
Check out the segments in the charts! These type of cycles repeat themselves- Don’t miss it the next time.
