Silver rallied as expected last week from an oversold position, having first dropped back to the $6.85 area, but turned sharply lower on Friday. With a limited dollar rally to the 85 - 85.50 area now in prospect, it is likely to dip back to the $6.60 - $6.80 area over the short-term. As with gold, however, a break of the uptrend line going back nearly a year, will not be viewed as serious - especially because this is believed to be a heavily manipulated market, vulnerable to engineered shakeouts.
Over the longer-term, the dollar is expected to stall beneath the heavy resistance in the 85 - 86 area and its larger downtrend reassert itself, taking it to new lows, as detailed in the Gold Market update. This development should see silver break out upside from the huge symmetrical triangle that has formed over the past year, and which is clearly visible on the accompanying 3-year chart.
