Best of the Week
Most Popular
1.Oil Wars 2016 - US vs Russia vs Saudi Arabia vs Iran - Nadeem_Walayat
2.Crude Oil Price Crash Triggering Global Instability, Trend Forecast 2016 - Nadeem_Walayat
3.Stock Market Crash - Last Week was The 2nd and Final Warning... - Clive_Maund
4.Stock Market Crash Apocalypse or Bull Market Severe Correction? - Nadeem_Walayat
5.TShipping Said to Have Ceased… Is the Worldwide Economy Grinding to a Halt? - Jeff_Berwick
6.Crude Oil Price Crash Catastrophe, Independant Scotland Literally Begging to Rejoin the UK - Nadeem_Walayat
7.Summers: Global Economy Can't Withstand Four 2016 Fed Hikes - Bloomberg
8.Gold And Silver: New World Order: Public Be Damned, Preferably Dead - Michael_Noonan
9.Rigged U.S. Ttreasury Bond Market Double Barreled Hidden Q.E. To Infinity - Jim_Willie_CB
10.Major Stocks Bear Market Awakening - Zeal_LLC
Last 5 days
UK Interest Rates, Economy Forecasts 2016 and 2017 - Video - 10th Feb 16
World Markets Are in Sync - 10th Feb 16
If You Miss Buying Gold – You Will Regret, it Later - 10th Feb 16
The Fed Doesn't have a Clue! - 10th Feb 16
How Far Can Gold Price Go? - 10th Feb 16
It's Stock Market Panic Time! - 9th Feb 16
Gold Stocks Picks for Patient Pickers - 9th Feb 16
Oil Price Collapse U.S. Recession Odds 2016 - 9th Feb 16
Preparing for Crisis - It's About Risk Mitigation and Capital Preservation - 9th Feb 16
Top Silver Mining CEO: Don't Laugh, We Could See Silver $100+ - 8th Feb 16
Gold, Investment Leadership Changes Permanent? - 8th Feb 16
Stock Market Panic Decline Begins... - 8th Feb 16
How to Save Money By Growing Your Own Homegrown Tomatoes Indoors From Seeds - 8th Feb 16
US Economy Slides One Step Further Towards A Recession - 8th Feb 16
Gold Bear Market Bottom : Mr. Bear has left the PM Sector for Greener Pastures - 8th Feb 16
Stock Market At Important Support - 8th Feb 16
David Cameron Humiliated in Poland Over Refusal to Stop Taking UK Benefits, BrExit or Super State? - 8th Feb 16
Why Crude Oil Prices Could Continue FALLING From Here - 7th Feb 16
Stock Market S&P, NAS Best, Most Reliable Answers Come From The Market And You - 7th Feb 16
Stocks Bear Market Continues - 7th Feb 16
Silver COT Paving Way for Sustained Upside Breakout Sharp Rally - 7th Feb 16
US Dollar Double Top, Gold Prospects Brightening Rapidly - 7th Feb 16
Gold And Silver - Is A Bottom In? Nothing Confirmed - 7th Feb 16
Gold Stocks Something has Changed - 6th Feb 16
UK Interest Rates, Economy GDP Forecasts 2016 and 2017 - 6th Feb 16
Gold Price, Mining Stocks Rocket Higher - 5th Feb 16
Crude Oil Price Bottoms and Blues - 5th Feb 16
Gold and Silver: Ripe for a Recovery! China May well Change the Game - 5th Feb 16
How Pension Plans are Responding to Financial Repression - 5th Feb 16
Senior Gold Producer Goldcorp Takes Large Stake in Nevada's Gold Standard Ventures - 5th Feb 16
Tips for Smart Oil and Natural Gas Investing 2016 - 5th Feb 16
Another Corporate Giant Is Leaving the U.S. – What This Means for You - 4th Feb 16
TPP is Economic Warfare, Trade Can Make Everyone Worse Off / Governments are Stupid - 4th Feb 16
Gold and Stock Markets Inflection Points Galore - 4th Feb 16
Putin Cries Dyadya (Uncle), Is Saudi Arabia Listening? - 4th Feb 16
Gold Price Golden Bottom? Video - 4th Feb 16
Look North for Value-Priced Growth in Healthcare Biotech Stocks - 4th Feb 16 - TLSReport
BrExit EU Referendum - Britain's FINAL Chance for Freedom From Emerging European Superstate - 4th Feb 16
HUI Now Confirming Gold Price Move Higher - 4th Feb 16
Crude Oil Price Forecast 2016 As Good As It Gets - 4th Feb 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Financial Crisis 2016

Silver Back in Buying Territory Ahead of Powerful Uptrend

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

By: Clive_Maund

Commodities

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 www.sentimentrader.com

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
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 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 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

Biggest Debt Bomb in History