Rebound in sight for silver after sell-down

AFTER a brutal sell-down in recent weeks, a near-term rebound looks likely for silver. The metal had been consolidating tightly within the US$16.68 range low and US$17.35 range high since September. The break below the US$16.68 range low on Nov 29 ignited a selloff.

Silver fell from a high of US$17.00 to a low of US$15.70 over the next eight trading days. As a result, the accelerating bearish momentum moved the Relative Strength Index (RSI) into an oversold condition.

The RSI hit an extreme low of 25 on Dec 12. RSI measures momentum and a reading above 70 represents an overbought condition while a reading below 30 represents an oversold condition.