Last week, silver strained within a narrow range around its 100-day moving average, as it fluctuated with restraint around $35 for the whole week.
The sharp falls of recent weeks have decreased and a breakout is expected to happen soon, most likely on the upside. As many analysts commented, silver appears fundamentally strong due to its use in industry, while gold is consumed in jewelery. The recent slump appeared overdone for a correction, causing many to panic and loose their positions.
The huge plunge in the price of silver happened very quickly and occurred over a holiday period when volume was quite low.
It is not sure, but many traders explain the latest slump as a price manipulation by major players, who were about to take a big hit on some major short positions and managed to stimulate some panic selling.
However, it seems like significant support has now been established around the $33 level. This level is expected to provide a firm base for a recovery in the coming weeks.
To the downside, a break below $32 would likely trigger further falls towards the late January low around $26.50, although this is the less likely scenario at this point.
