With the dollar having fallen to its first downside target, and now short-term oversold and on strong support, and gold still beneath strong resistance at $430, silver looks vulnerable to a short-term reaction here that may see it dip back below $7 once more, as the dollar trades sideways or stages a feeble rally. The precipitous nature of the dollar decline however means that, after a brief respite to unwind its oversold condition, perhaps lasting several weeks, it is likely to crash its next support level, at which time gold should break out above $430 and silver should surge higher.
The lower boundary of the trend channel in force in silver since the May low should be used to gauge the MAXIMUM extent of any reaction, although because the uptrend is believed to be accelerating, it should not drop below the parabolic uptrend line on any reaction, and should it do so it will give grounds for caution. The parabolic uptrend takes precedence over the lower trendline. Any approach towards the parabolic uptrend line over the next several weeks will be viewed as a buying opportunity.
