FxWirePro: Silver outlook – setting a key bottom

Silver after touching key support level of $14/troy ounce in August as turmoil in financial market unfold after Peoples bank of China (PBoC) devalued Yuan by almost 2%, has been showing signs of some sort of comeback or larger correction.

Though broader downtrend is still intact, this week's rally in Silver which is up close to 5% so far this week confirms that Silver has set an important bottom around $14 and probability of further rise has definitely increased.

With rate hike from FED is in serious doubt in this year, Silver stands ready to gain further.

As shown in the figure, last week silver formed a key hammer in weekly chart taking support from rising trend line. This rising trend line, which has been in place since mid -August and falling down trend line which has been in place since August 2013 is likely to provide lot of opportunities in the short term.

Trade idea 

• Silver is initially likely to gain to $16.4 area, one might speculate on the long side using $15.4 area as stop.
   
• Bears are likely to get active around $16.4 resistance area, even if silver is looking to break out there exists short term opportunity from there targeting $15.5 and $15 respectively.
   
• Breaking the resistance area around $16.4 would immediately bring next target around $17.7 into focus.