Silver fell below pyschological round number support at $34 but then recovered, only barely, by the end of the trading day. It is clinging to support above this level as I write this.
There is a band of stronger support as one drops down towards $33 which will be tested unless the market can keep its footing above $34.
It is still trying to repair the technical damage inflicted from last Wednesday's bear raid which forced an outside reversal pattern on the daily chart. Thus far this selling that we are seeing seems to be drying up as it does move below $34 but any further negative global economic news will see that selling reappear once again.
Gold dropped below $1700 at one point but value buying took it back above this level. Just as with silver, it is going to have some work to do in order to repair the technical damage it suffered last Wednesday. Chart painting is more effective in these modern markets because very few fundamentally based traders are still around anymore. Alan Jackson had a terrific hit song entitled, "GONE COUNTRY" which contains a line that says: " the whole world's gone country". Well, the whole world has gone technical analysis when it comes to trading. Therefore chart painting has to be respected for the technical signals its gives off. Value based traders can still take advantage of this but they need to be careful.
There seems to be a bit of a tug of war between those who are reading the recent US ECONOMIC DATA as encouraging and those who are looking at a recession in the Euro Zone coupled with slowing Chinese growth prospects eventually spilling over into the US. We will see which side wins out in this battle - the bonds were even conflicted today - first rising on the slowing growth news and then sinking lower to close the day as the equity market recovered from its worst levels of the session.
Not too much definitive to say therefore until we get a clearer picture.
