Silver Prices Made A Reversal Day Again

For the second time this week, gold found strong support after a retest at the 20 DMA. The first test took the metal down to $1589 before retracing higher. We witnessed a copy and paste scenario yesterday. This may suggest that short sellers are short covering their positions as we approach the end of the Q1, and ahead of the long weekend in Europe. It also indicates that short sellers are under pressure to offload their positions for a good profit. The recent trade of blows between bulls and bears may soon come to a conclusion that prices could head higher.

Technically, gold managed to stay above the 20 DMA at $ 1592.22 and reversed higher. Moving forward, it will need more buying momentum to sustain well above $ 1600.00 before tackling the pivotal resistance level of $ 1620.00. Gold will be very sensitive to the next economic data from the U.S. and this data could prove to either stop the good rebound it has put in, or potentially act as a catalyst for gold to push higher before we enter the Q2 trading period.

Long gold at $ 1620.00 target $ 1630 with a stop loss at $ 1611.50.
Long gold at $ 1592.50 target $ 1618 with a stop loss at $ 1575.00 – In Progress
Resistance: $ 1615, $ 1625, $ 1634 (50 DMA), $ 1650, $ 1686, $ 1697 (previous high)
Support: $ 1592, $ 1584.86, $ 1580.39, $ 1522 (2012 low)

The Daily Chart shows some encouraging buying interest on silver. Prices moved lower on March 22 with a low volume, and it reversed higher on March 25 with a strong high volume. Once again, silver prices made a reversal day with a higher volume, indicating strong buying interest as there are more buyers than sellers. The Bollinger band remains tight and there is no outbreak to the downside, suggesting that a market bottom is in place and we could be witnessing higher silver prices.

Despite such encouragement, a dominant US dollar continues to cap any rallies and we repeat caution for any silver trade. Unless silver can trade above $ 29.50, we will remain bearish. There is too much volatility (and non-volatility) to take a position.

Long silver at $ 29.40 target $ 29.80 with a stop loss at $ 29.15
Short silver at $ 28.20 target $ 27.60 with a stop loss at $ 28.40 – Stop Loss Triggered.
Resistance: $ 29.50, $ 29.74 (38.2%), $ 30.19 (50%)
Support: $ 28.33, $ 27.93, $ 27.50