Weekly Silver Technical Update(17/9/12-22/9/12)

Weekly Technical Analysis for Silver:

The fed announced QE 3(Operation Twist/Infinity), stating that it would provide monetary stimulus of $40 billion dollars every month by buying mortgage backed securities, and this would continue until the FED finds the economy to be back on track.The primary motive of this is to increase spending by keeping the interest rates low(while QE1 & QE2 with similar motives failed miserably).This news usually is bullish for both gold and silver and was confirmed by the rally right after the announcement was made.

                       However,both gold and silver are at short term overbought levels and are arriving at a very important trend line highlighted in the monthly chart attached.Though the medium term has turned neutral/neutral bullish, silver would be ready for a pullback into the 32.50-32.24 zone and then finally the 31.57-30.54 zone,while a breach of 34.98 would result in 35.50-35.98 and then finally 36.50-37.22(low probability but a possibility).

Happy Trading.