Silver’s Price Seasonality
Taki Tsaklanos | Apr 16, 2017 07:23AM ET
We talked about silver for the medium term in yesterday’s article Silver Price Close To Major Breakout. As discussed, the article was focused on a potential tactical breakout in silver, leading to a short to medium term bull market.
Readers reacted to that article, asking what to make out of it in the bigger scheme of things, which is the topic we discuss in today’s article. Exceptionally, we will also look at seasonality in the price of silver. Although we do not consider seasonality a primary indicator, but rather a secondary indicator, we believe this is an interesting month for reasons outlined below.
h2 Silver Bear Market Continues Until It Breaks Out/h2As said before, silver is still in a bear market. The falling channel indicated in purple on the chart below makes that point.
Interestingly, silver is right now exactly in an area in-between a falling channel (purple) and a rising channel (green dotted lines). The intersect of both the bearish trend and the bullish trend has, so far, delivered great fireworks.
Silver price seasonality could play an important role in the weeks to come. Why? Because on an annual basis silver tends to peak during the month of April. In May and June, silver tends to go sharply lower, only to recover in July, and continue its downtrend and stabilize throughout the second half of the year. That is based on the seasonality chart of silver over the last 3 decades, courtesy of our good friend Dimitri Speck from silver seasonal charts .
As said, this is an average behavior over 3 decades, so it could well be that 2017 will be an exceptional year. Nobody knows.
The point we are trying to make is this: when combining the seasonality chart of the silver price with the chart pattern in silver’s long term chart, it becomes very interesting. If silver is peaking for the year, then it would be right at major resistance, and would indicate that weakness will continue in the price of silver, exactly in line with our silver price forecast for 2017. If things will turn out differently, our silver price forecast could be invalidated.
The coming weeks will be extremely interesting and also important for the silver market.
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