Why silver is poised for a big crash into the teens

Some weeks ago in a Silver Market update we had noted that a large potential Head-and-Shoulders top area was completing in silver, but we got “thrown off the scent” by the positive Accum-Distrib line (now rapidly reversing) and the seemingly strongly bullish COT structure.

In the light of the severe bearish breakdown by stocks indices last week this potential H&S top is now viewed as legitimate.

Silver held up remarkably well last week considering what happened to gold, which is a straw that silver bulls are now clutching on to as evidence that silver is still in a bullmarket, but the reason that it held up so well is that it is close to a zone of strong support towards the lower boundary of the H&S top area.

Once this support fails it’s “curtains” for silver which can be expected to plunge into the high teens.

The Head-and-Shoulders top is shown on the 3-year chart for silver shown below. On this chart we can also observe various other bearish factors that are now coming into play.

-One is that silver has been trading way below its 200-day moving average since the September plunge, and this indicator is now rolling over and about to turn down, which will put the price and its moving averages in nearish alignment for the first time since 2008.

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Tags: price of silver, Silver, silver analysis, silver futures, silver futures prices, silver news, silver price, silver prices, silver spot, spot silver

Posted by Silver Guru on Dec 19 2011. Filed under Silver Analysis. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry