On December 7th I blogged about the resistance line that appeared to be in the process of being decimated (Link). For the several weeks following the price of Silver hovered around that resistance point, moving slightly above the line in late December, but then over January Silver experienced a sharp correction of around 13.5% moving from the intraday peak of $30.69 to $26.53.
It seemed that the war was lost. Speculative money started withdrawing their long positions. Sentiment turned down. Some started expecting sub $20 Silver again. We saw a large turnaround at the start of February, Silver started rising again and the last few days has seen some spectacular gains. Moving higher by around $1 per day over several trading sessions Silver has taken most by surprise and has blitzed the overhead resistance:
It's worth noting that Monday's trade was with US markets closed. The price of metals has been known to shoot higher during these sessions and then get pulled back into line once US markets open. This is likely why we are seeing a correction in Silver price currently (price has fallen from high of $34.33 to a low of around $32.75 a short time ago).
Where to from here? I suspect we will have a new support level around the $30.50-$31 mark, but ultimately I think Silver is heading higher in the short term so it may not be tested.
I think there is potential for higher prices early this year as I suggested in my 2011 predictions post (Link).
That said I don't trade the short term movements, so they are of little consequence to me as long as the bull market is intact I will continue to hold and buy dips where appropriate.
Disclosure: Positions held in Silver. Not investment advice. Do your own research.