Silver Eyes New Upleg
Clive Maund | Sep 06, 2016 10:50AM ET
On its 9-month chart below, we can see that silver broke down from an intermediate top -- as expected -- toward the important support shown. But Friday's rally suggests the metal may not drop that far and could again turn up. Overall, this is a positive looking chart and the main question is which uptrend channel will it adhere to. There has been a significant price-time correction since early July that has completely unwound the prior overbought condition. So Friday’s turnaround could mark the beginning of the next upleg. Even if silver heads down again, it probably won't fall below the support at and below $18.00 -- especially since is underpinned by an important channel support line. If it does drop that low, silver will still look attractive.
The long-term, 10-year arithmetic chart gives us a much broader perspective. This is actually a very positive chart overall as it reveals that silver’s bear-market phase from 2011 has definitely ended. However, silver has risen quite sharply in recent months to a zone of significant resistance, and the current reaction is quite normal and should set it up to break above that resistance and continue higher.
The silver optix, (optimism) readings have eased significantly from high levels that made further gains difficult. The current readings at about 56% make renewed advance much more plausible.
Chart courtesy of www.sentimentrader.com
COTs and hedged positions continue to run at a high level and may be cause for concern -- although they have eased a little in recent weeks. Such readings usually, but not always, lead to a substantial drop, so we should keep that in mind. On rare occasions such positions stay high as the uptrend continues. Therefore current readings won’t necessarily prevent a rally, here, but can be expected to act as a restraining influence, especially if they get even more extreme.
Get The News You Want
Chart courtesy of sentimentrader.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.