Best of the Week
Most Popular
1.Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - Harry_Dent
2. Is This How World War III Begins, In Almost Complete Silence? - Jeff_Berwick
3.Trump Wins 2nd Presidential Debate, Betfair Betting Markets Odds Bounce - Nadeem_Walayat
4.Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - GoldCore
5.End of SPX Stock Market Correction Nears - Tony_Caldaro
6.Get Ready for the Future - Exponential Machine Intelligence Mega-trend towards Singularity - Nadeem_Walayat
7.US Housing Market Bubble II – It’s Happening Again! - Andy_Sutton
8.FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs - Nadeem_Walayat
9.Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - Nadeem_Walayat
10.Gold’s, Miners’ Stops Run - Zeal_LLC
Last 7 days
Inflation About To Explode Higher - 22nd Oct 16
Still waiting for SPX uptrend to kick off - 22nd Oct 16
Will a Rising US Dollar Crush Gold’s Fledgling Bull? - 22nd Oct 16
Why The Global Economy Will Disintegrate Rapidly Back to Olduvai Gorge - 22nd Oct 16
GLD Bleeds Out; Weekly Gold Update - 22nd Oct 16
Stock Market Investment Success Through the “Investment Rule of 72” - 21st Oct 16
The Final Bottom in Gold - WHEN - 21st Oct 16
Gold Green Lights Upleg - 21st Oct 16
Demand for US Mints Silver Eagles has ‘Returned with a Vengeance’ - 21st Oct 16
Central Bankers Can't Stop The Death Blow Of The Post US Election Recession - 21st Oct 16
The Fortune at the Bottom of the Pyramid: Golden Opportunity for Frontier Asia - 21st Oct 16
Have You Taken These 4 Simple Steps to Improve Your Trading? - 21st Oct 16
The Stock Market is an Accident Waiting to Happen - 20th Oct 16
It's Rally Time for Gold and Silver Equities - 20th Oct 16
Cashless Society – Risks Posed By The War On Cash - 20th Oct 16
China's insane Housing Market Will Tumble and Crash in 2017 - 20th Oct 16
Donald Trump Bounces Going into 3rd and Final US Presidential Election Debate - 20th Oct 16
Attention Please: Phase Two of the Gold and Silver Train Now leaving the Station. All Aboard? - 19th Oct 16
How to Successfully Trade a Stock Market Crash - Black Monday October 19th 1987 - 19th Oct 16
Tesla, Apple and Uber Push Lithium Prices Even Higher - 18th Oct 16
Silver, Debt, and Deficits – From an Election Year Perspective - 18th Oct 16
UK Property Market: Slow Growth Does Not Equate To Decline - 18th Oct 16
Trump Election Victory is in Your Power - 18th Oct 16
Stock Market More to Come! - 18th Oct 16
This Past Week in Gold and Silver - 17th Oct 16
A Falling Stock Market Cannot Be Allowed - Financial Repression Is Now “In-Play”! - 17th Oct 16
Commodities, Forex and Stock Market Trend Forecasts - 17th Oct 16
Stock Market Crash..or No Crash? - 17th Oct 16
A perspective on risk rally – Risks abound but Stock Market is Confident - 17th Oct 16
Bank of England Blames Brexit for Sterling Drop Inflation, Masks QE Money Printing Cause - 17th Oct 16
From Piety to Pride to Pity, America's Racial Divide - 17th Oct 16
Is Obama Juicing US Government Spending To Get Hillary Clinton Elected? - 16th Oct 16
Seek Your Independence: Anything Else Will Destroy You - 16th Oct 16
SNL - US Presidential Debates, 1st, 2nd, VP - Like You've Never Seen them Before! - 16th Oct 16
End of Economic Growth Sparks Wide Discontent - 16th Oct 16
Donald Trump on Life Support, May Abandon Election Campaign and War on Republican Party - 15th Oct 16
The Gold Manipulators Not Only Will Be Punished, They Have Been Punished - 15th Oct 16
Black Votes Matter - Is the US on the Verge of Mass Race Riots? - 15th Oct 16
Gold Stocks Screaming Buy - 14th Oct 16
Brace Yourself for the Quadrillion-Dollar Reckoning - 14th Oct 16
The Next Recession Will Blow Out the Budget - 14th Oct 16
John Mauldin: My Infrastructure Plan to Save the US Economy - 14th Oct 16
World War III On The Brink: War Will Continue Until It Triggers Economic Collapse - 14th Oct 16
US T-Bill Rejection At Ports In Progress - 14th Oct 16
These 2 Debt Instruments Pose Peril to Millions of Investors - 14th Oct 16
China’s Rocketing Housing Market Real Estate Bubble - 14th Oct 16
DIY Winter Home Maintenance Money Saving 22 Point Checklist to Get Ready for Winter/Fall - 14th Oct 16
US Stock Market, Big Picture View - 13th Oct 16
Stock Buybacks Main Force Driving Bull Market; Rewards Investors and Starves Innovation - 13th Oct 16
SPX Gapping Down... - 13th Oct 16
Syria - Obama Stepped Back From Brink, Will Hillary? - 13th Oct 16
The Structure and Future of Gold in the Investment and Monetary World - 13th Oct 16
Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - 12th Oct 16
Gold and Crude Oil - General Stock Market Links - 12th Oct 16
Samsung's Galaxy Battery Just The Tip Of The Iceberg - 12th Oct 16
Hillary: Deceit, Debt, Delusions (Part Two) - 12th Oct 16
Gold and Silver Metals Show Strength Relative to the USD Index - 12th Oct 16
Announcing Trader Education Week -- a Free Event to Help You Learn to Spot Trading Opportunities - 12th Oct 16
Confirmed Stock Market Sell Signals - 11th Oct 16
Hillary Deceit, Debt, Delusions - 11th Oct 16
Trump Support Crashes to New Low of 6.4 on Betfair Odds Betting Market - 11th Oct 16
The World Is Turning Dangerously Insular - 11th Oct 16
An American Tragedy: Trump Won Big - 11th Oct 16

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

LEARN to Trade

Silver Back in Buying Territory Ahead of Powerful Uptrend

Commodities / Gold and Silver 2013 Feb 24, 2013 - 04:43 PM GMT

By: Clive_Maund


Even though the technical indications for silver are not as strongly bullish as those for gold, they are now sufficiently positive that silver is likely to take off higher before much longer, encouraged by the strength that we should soon see reappear in gold. Of course, it will probably take some weeks for sentiment to recover sufficiently to drive a significant rally after the latest sharp drop, so we may see some backing and filling before a sustainable uptrend can get going, but that is normal.

We predicted another downleg in silver in the last update, which was posted on the 10th, due to the still bearish COTs at that time and the way that silver was topping out beneath a zone of resistance. The downleg started the next day and has proven to be quite severe, as we can see on our 7-month chart below. The decline did not pause at the support at the early January bull hammer, but continued lower to another support level and the trendline target shown. The bounce on Thursday and Friday occurred because silver has become critically oversold on its RSI, but it looks weak, and so we could see some more minor downside short-term before the current downleg has completely run its course. Nevertheless, we are believed to be close to an important bottom here.

Silver 7-Month Chart

On its 3-year chart we can see that silver has dropped back close to the lower boundary of its recent trading range. While we may see a little further downside short-term towards the strong support at the bottom of the trading range, it is now viewed as entering buying territory, however, this support is clearly defined and of great importance as it has turned the price back up to start significant rallies on 3 occasions over the past 17 months, so it must hold - if the price breaks below it, it would likely trigger a plunge as lines of stops would be triggered.

Silver 3-Year Chart

Another bullish point to note is that after breaking out of its downtrend back last August - September, silver has not dropped back into it, but has instead drifted back down in a reaction, riding the support above the upper trendline. The current position of the price not far above this trendline and also just above the critical support towards $26.50 suggests that it is now at a very good point for a major new uptrend to start.

The long-term 7-year chart is encouraging as it shows that all of the action from the April - May 2011 highs looks like nothing more than a reaction within an ongoing major uptrend that should re-assert itself before much longer, although as we can see the lower channel has not yet caught up with the price - but it may not have to, given the now super positive outlook for gold.

Silver 7-Year Chart

So it is good to see that we now have at last a significant improvement in silver's COT structure on its latest chart, which, since it is only up to date as of last Tuesday, does not take into account the sharp drop in silver's price that occurred on Wednesday, and so these figures can be presumed to be better still now. However, it must be said that there is considerable room for improvement, and we may see it in the weeks ahead if silver backs and fills for a while above the support before the expected new uptrend begins. That said, it is considered prudent not to wait for that to happen before taking positions, because downside now looks very limited and gold's COT (and other indicators) is already very bullish indeed, meaning that it could take off higher with little delay now.

Silver COT

The public were still too bullish on silver just a few weeks ago, which is a big reason why it plunged, but as we can see on the latest public opinion chart, they have now curbed their enthusiasm, which is a good thing. Public opinion is now back at the more acceptable levels from which a strong uptrend can get started.

Silver Public Opinion

Chart courtesy of

In conclusion, although silver may back and fill short-term, and possibly drop back a little more towards its key support level at and above $26.50, it is now viewed as being back in buying territory ahead of the powerful uptrend that is expected to develop before much longer that should take it comfortably to new highs.

By Clive Maund

For billing & subscription questions:

© 2013 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

© 2005-2016 - 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

Catching a Falling Financial Knife