Violent Movements in Gold and Silver

Yesterday the precious metals experienced their most violent movements since their colossal two day breakdown in mid April.  In the overnight session, silver broke down below long term major support at $22, a figure it had not been below since the fall of 2010, and bids quickly evaporated from the market.  Follow through selling caused silver to lose 10% before ultimately finding support ahead of $20.  As the US entered the market though, an incredible short covering rally ensued.   The precious metals were galvanized by a surging euro.  Moody’s had warned that concerns over US debt could prompt a credit downgrade and this allowed the euro to catch bids off its seven week low.  Silver ended up spiking $1 in less than 5 minutes while gold jumped $30 in the same time frame.  Silver had a $3 range on the day and put in a key reversal pattern (as did gold and platinum).  A key reversal is a bullish technical signal that occurs in a downtrend when an asset opens below the previous day’s close, makes a new low, and then closes higher than the previous day’s high.