Fundamentally, the Comex/Globex silver market can trade in two ways unlike the gold.
The silver can move like a precious metal, but also like an industrial metal as its use in manufacturing has been widely reported. Over the last few days and weeks the move lower in silver can be explained, in my view, by a couple of reasons. One is the fact that the silver has been a "risk-on" asset and not a safe-haven trade. This is to me is odd, particularly when you look at the fact that there have been some serious concerns about Fiat currencies, notably the euro and the drachma (due to the sovereign debt issue crisis in Greece).
Silver, in my opinion, also moved lower recently due the falling Chinese stock market and the idea that there will be less industrial demand for the metal in China. I expect this trend to continue especially with no real concerns about inflation. In fact, commodities and futures markets are in general in a deflationary period in my opinion.
Technically, I have added my favorite technical indicators to the silver chart below. They are the 10 (red line), 20 (green line), and the 50 (blue line) period simple moving averages or SMAs. I have also added Bollinger Bands or BBs (the light blue shaded area) and Candlesticks (the red and green bars). On the daily chart below each bar or Candlestick represents one day of trading.
I have coined this combination of my favorite technical indicators the 10/20/50/BB Trend Finder system. These few technical indicators tell me several different characteristics about the market at a quick glance. I have them saved on my charts in MARKETHEAD so they can populate on any chart, any market, and any time frame at the click of a mouse.
On the daily chart I have September silver in what I refer to as a "Principal-Trend" down. This is the strongest form of a trend that my 10/20/50/BB Trend Finder system can identify. In order to achieve this what we need to have happen first is a cross of the 10 period SMA (red line) down and under the 20 period SMA (green line) as both indicators point lower on fairly sharp angles while the market itself trades below the 10. Now we have the 10 period SMA as our first area of resistance, then the 20, and next, on the daily chart below the 50 day SMA.