Silver, the worst performing commodity this year, may drop a further 12 percent to a new three-year low as it forms a triangular pattern called a bearish pennant, said Barclays Plc.
Spot silver has moved into a narrowing price band since June 28, when it touched $18.2305 an ounce, the lowest level since August 2010. A close below $19.25 may prompt more selling and pull the metal within a few weeks to as low as $17.50, a level last traded in July 2010, said Dhiren Sarin, chief technical strategist for Asia Pacific in Singapore.
“We see it potentially forming a bearish pennant,” said Sarin in a phone interview today. “We are moderately bearish at the moment though we are watching these levels.”
The metal, which tumbled into a bear market in April along with gold, lost 35 percent this year to become the worst performer among the 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index. Silver for immediate delivery traded at $19.832 an ounce at 12:04 p.m. in Singapore.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
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