Best of the Week
Most Popular
1.Is the Stocks Bull Market Over? Dow Trend Forecast into End January 2015 - Nadeem_Walayat
2.Gold and Silver Stocks Apocalypse Now, Bear Market Review - Rambus_Chartology
3.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
4.Ebola Terror Threat Suicide Bio-Weapons Threatens Multiple 9/11's, Global Plague - Nadeem_Walayat
5.Second-Richest Man Says Mortgages Now a "No Brainer" - Dr. Steve Sjuggerud
6.Gold And Silver Still No End In Sight - Michael_Noonan
7.NHS Baldrick Plan to Spread Ebola Across UK - Sheffield, Newcastle, Liverpool, London Hospitals - Nadeem_Walayat
8.The Gold Bug is Set to Bite Back - EWI
9.How Alibaba Could Capitalize on the EBay-PayPal Split - Frank_Holmes
10.The Consequences of the Economic Peace - John_Mauldin
Last 5 days
Bullish Silver Stealth Buying - 24th Oct 14
Blood in the Streets to Create the Gold Stocks Investor Opportunity of the Decade - 24th Oct 14
Swiss ‘Yes’ and ‘No’ Gold Initiative Campaigns Compete at Launches in Bern - 24th Oct 14
War And The Law Of Unintended Consequences - 24th Oct 14
Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - 24th Oct 14
Saudi Move to Cut Oil Prices Is Now Russia's Biggest Economic Threat - 24th Oct 14
US Stock Market Top Is Now In Sight - 24th Oct 14
New Profit Points in the Shifting Balance of Power, Welcome to Saudi America - 24th Oct 14
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches - 24th Oct 14
U.S. Economy Faltering Momentum, Debt and Asset Bubbles - 23rd Oct 14
Annuities - Afraid Your Money Will Vanish before You Do? - 23rd Oct 14
What Debt Deleveraging? - 23rd Oct 14
How to Profit from Massive Spin-Offs with Just One Play - 23rd Oct 14
Evaluating Ebola as a Biological Weapon - 23rd Oct 14
Euro, USD, Gold and Stocks According to Chartology - 23rd Oct 14
Why You Should Always Be Invested in the Stock Market (Even Now) - 23rd Oct 14
Five U.S. Housing Market Warning Signs Point to Real Estate Market Downturn - 23rd Oct 14
The Better Short: Gold or Silver? - 23rd Oct 14
Focus on Graphite Companies with Green Energy and Technology Strategies - 22nd Oct 14
Crude Oil Price Hitting Bottom - 22nd Oct 14
Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - 22nd Oct 14
Gold Or Crushing Paper Debt Stocks Crash? - 22nd Oct 14
India Gold Demand Surges 450% and Bank of Russia Demand At 15 Year High - 22nd Oct 14
Bitcoin Stock Exchange Could Be "More Valuable than Alibaba" - 22nd Oct 14
Currency War - How to Profit from a Stronger U.S. Dollar - 22nd Oct 14
Banks Hold Treasuries and Make Loans- 22nd Oct 14
Gold and Silver Timing is Everything - 22nd Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VII) - 22nd Oct 14
Follow the Baby Boom to Biotech Stock Profits - 22nd Oct 14
Copper, Nickel and Zinc Won't Be Cheap for Long - 22nd Oct 14
How Will We Know That the Gold & Silver Price Bottom Is In? - 21st Oct 14
Is Gold as Dead as Florida Hurricanes? - 21st Oct 14
First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45% - 21st Oct 14
The Similarities Between Germany and China - 21st Oct 14
The REAL Reason Why the Stock Market Turned Down - 21st Oct 14
Petrobras is a 'Scheme, Not a Stock' - 21st Oct 14
Stocks Bear Market Indicator Is Off the Mark - 20th Oct 14
Stock Market Ideal Turning Point is at Hand - 20th Oct 14
Investors Quit Complaining, The Environment is Perfect Right Now - 20th Oct 14
Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices - 20th Oct 14
Gold vs Euro Risk Due To Possible Return of Italian Lira - Drachmas, Escudos, Pesetas and Punts? - 20th Oct 14
Stocks Rebounded Following Recent Sell-Off, But Will It Last? - 20th Oct 14
U.S. Responsible for West Africa Ebola Outbreak Says Liberian Scientist - 20th Oct 14
Stock Market Intermediate B Wave has Started - 20th Oct 14
Gold Stocks Analysis – FNV, CG, NCM, SBM - 19th Oct 14
Stock Market Primary IV Wave Counter Trend Rally - 19th Oct 14
Gold And Silver - Financial World: House Of Cards Built On Sand - 18th Oct 14
Anatomy of a Stock Market Sell-Off - 18th Oct 14
Why OPEC Has Declared an Oil War on Russia - 18th Oct 14
Gold and Silver Extreme Shorting Peaks - 18th Oct 14
Bitcoin Price Fall to $350? - 18th Oct 14
Tesco Supermarket Crisis Worse To Come as Customers Vanish! - 18th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Silver Major Uptrend Underway, Not to Late to Go Long

Commodities / Gold and Silver 2012 Nov 25, 2012 - 10:49 AM GMT

By: Clive_Maund

Commodities

Recent action in silver has been very bullish. It barely paid lip service to the technical requirement to drop back and form a Right Shoulder to its Head-and-Shoulders bottom before breaking out of this base pattern back last Tuesday, without waiting for either gold to break out, or for the dollar to break down. When gold did actually break out on Friday, and the dollar broke down, it built on these achievements by breaking clear above the resistance near to its 50-day moving average.


On its 6-month chart we can see this strong action and how it is already on its way, launching into a new uptrend. In the last update we detailed 2 points to buy, 1 on a dip to about $31.50 to form the Right Shoulder. It did dip a little, but not so far, so we missed that chance to buy. The other point to buy was given as being on a closing break above $33 - that happened last Tuesday, so that's when we were in, theoretically at least, and thus we caught the surge on Friday. It should carry on up now, with occasional pauses to consolidate, and the MACD indicator, which is still close to neutrality, shows that there is plenty of upside potential from here before it becomes overstretched.

Silver 6-Month Chart

The 3-year chart is useful as it makes clear the importance of the nearby resistance level in the $35 - $37.50 area. This resistance level has turned the price back 3 times over the past 14 months, including the recent highs in September and early October, so it will be an important positive technical development when the price breaks above this resistance. Once it does it should run swiftly at the next resistance level, but this one, and the one approaching the highs, are not so strong and once the price succeeds in clearing all these resistance levels and breaking out to clear new highs, then upside momentum should build quickly.

Silver 3-Year Chart

The long-term 13-year chart for silver, which shows the bullmarket in its entirety, is very interesting. Although it is obvious at first glance that silver is in a major uptrend, it is not that easy to immediately define the boundaries of this uptrend. Normally would draw a trendline under the lows, but on this occasion the uptrend is better defined by a trendline drawn across the highs. Searching then for a parallel lower trendline that fits, we find that if we ignore the freak 2008 lows, we get the fairly tidy parallel trendline fit shown. This is very important, as the correct definition of this uptrend enables us to define a probable target for the next major uptrend. As we can see, if silver now goes for a completed run at the upper boundary of this uptrend, and it looks likely given the terrible outlook for the dollar, then we could easily see it hit a target in the $90 area for the move starting now, which is not bad! With the price having just broken out of the corrective downtrend in force from the wild April ' May 2011 highs, this major uptrend is believed to have just started.

Silver 13-Year Chart

The recent silver COTs have led to us adopting an excessively cautious stance in the past few weeks, as it turned out. While the Commercial short and Large Spec long positions certainly remain at a high level, and should be noted, there is nothing to say that these cannot expand to much higher levels during a continued uptrend, so that they 'fly off the scale'. In addition, as we can also see on this chart, Open Interest is continuing to grow at a rapid rate. This is bullish and it is what preceded the 3 biggest ramps in the silver bullmarket to date.

Silver COT

The following chart, courtesy of The Scarborough Bullion Desk in England ' Scarborough is a seaside town on the east coast of England which is famous, not just for the Scarborough Bullion Desk, but also for beach holidays for those who are into hypothermia in a big way ' is most interesting as it shows the ballooning of Open Interest on 3 occasions ahead of the 3 biggest price ramps of the silver bullmarket - now it's doing it again. Forget the scaling, which is awful, just compare the price with the Open Interest. Those of you who are familiar with silver price action in recent years will readily figure it out.

Silver Open Interest

The outlook for the dollar is terrible - it has just broken lower from the Right Shoulder peak of a large Head-and-Shoulders top, and once it breaks down from the entire pattern it will be headed a lot lower. This is what looks set to be a big driver for the expected major uptrend in gold and silver. We look at the latest dollar charts in the parallel Gold Market update.

In conclusion, silver is viewed as having broken out last week to start a MAJOR uptrend, and thus it is certainly not too late to go long or add to existing positions, and one can guard against the (now considered remote) possibility of this rally being a B-wave trap by simply placing stops, either below the support at the Right Shoulder low at $32, or below the early November lows.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2012 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014