Silver Plunges But Ready For A Major Bullish Reversal

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The price of silver extended downside movement on Monday, dragging the white metal’s value to less than even $15.25 following the release of of some key economic events. The short term technical bias however remains bullish due to a Higher High and Higher Low in the recent wave.

Technical Analysis

As of this writing, the precious metal is being traded near $15.14. A support may be noted around the current level which is the 23.6% fib level ahead of $15.00, the psychological level and then $14.36, the swing low of the last major downside move as demonstrated in the following daily chart.

Silver Plunges But Ready For A Major Bullish Reversal

On the upside, the white metal is expected to face a hurdle near $15.64-$15.66, the swing high of the Friday as well as 38.2% fib level ahead of $16.00-$16.07, the confluence of psychological number and 50% fib level. The technical bias will remain bullish as long as the $14.71 resistance area is intact.

Markit Manufacturing PMI

The latest reading of US manufacturing activity from Markit Economics came in at 52.9, the lowest level since October 2013. Economists had estimated a Purchasing Manager’s Index flash reading of 53.8 in August, unchanged from the prior period. Manufacturing output growth slowed from a three-month high in July, weighing down the index. New orders and employment also grew at a slower pace.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal around the $15.00 handle could be a good strategy if we get a bullish reversal candle on daily chart such as bullish pin bar, bullish engulfing candle or hammer because the turmoil in stock markets may fuel demand for Silver as safe heaven investment.

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