Silver drops sharply after false break above $30
Spot silver fell sharply on Tuesday (down nearly 7% until early hours of the US session) following short-lived surge to eight-year high on probe above $30 barrier on Monday.
The rally stalled after huge buying by a pack of small traders showed signs of fizzling out, despite calls over social media to continue buying.
Subsequent sharp acceleration lower suggests that a break higher was false, with formation of bull-trap above $30 on daily chart, expected to weigh further and lead to full reversal of nearly 20% advance in past three days, as today’s weakness already retraced over 61% of the rally.
Significant loss of bullish momentum and bearish divergence on daily stochastic add to fresh negative sentiment.
Daily close below cracked Fibo support at $26.86 (61.8% of $24.85/$30.10 rally) would fill Monday’s gap and validate fresh bears.
Res: 27.00; 27.48; 28.10; 28.90
Sup: 26.60; 26.25; 25.91; 25.28