|
We are believed to be at a good entry point
for silver here as the overall pattern is strongly bullish, and the predicted
reaction of the past few weeks, which has served to unwind the earlier
overbought condition, is now thought to have run its course.
 
On the 1-year chart we can see that after breaking
out of the strongly bullish fine Cup & Handle pattern, silver made a fairly
rapid run at the important resistance level in the $16.00 - $16.80 zone,
arriving there in a critically overbought condition, as shown by the RSI
indicator at the top of the chart, so it is hardly surprising that it has
reacted back over the past several weeks. We anticipated this reaction and
sidestepped it , which is just
as well as we can now buy back both silver and big silver stocks, some of
which are about 25% cheaper after the reaction. In the last update the
reaction was expected to terminate in the vicinity of the 50-day moving
average, which silver is close to now, or at a trendline drawn from the
October lows, which is not shown on this chart as it creates too much
clutter, but was shown on a 2-year chart in the last update. This trendline
is now at about $13.50. However, on Friday the big silvers rose on huge
volume - record volume in the case of some of them - and this is believed to
be evidence of Smart Money piling in ahead of a new uptrend. For this reason
the downtrend in silver is thought to have ended and it is rated an immediate
buy, even and especially if it dips early next week. Note that the uptrend
channel drawn from the early May low is still provisional and may require
adjustment depending on whether we have already arrived at the final low.
The long-term arithmetic chart for silver going back
to the start of the bullmarket is interesting as it shows that two very
long-term trendlines gave targets for the blowoff top early last year and
also the crash low point that followed late in the year. Observe also how
silver bottomed late last year just above a zone of important support dating
back to the extensive trading in the long 2004 - 2005 trading range. Finally
the red downtrend line shown was a tool used in the last update to call the
recent top. This downtrend line should be overcome by the next upleg.
Clive Maund
Diploma Technical Analysis
support@clivemaund.com
www.clivemaund.com
All articles by Clive Maund
Trading the precious metals and Energy
Www.CliveMaund.com is a site dedicated to serious investors and
traders in the precious metals and energy sectors. It offer my no nonsense,
premium analysis to subscribers. Our site is 100% subscriber supported. We
take no advertising or incentives from the companies we cover. If you are
serious about making some real profits, www.CliveMaund.com is for you! Happy
trading.
No responsibility can be
accepted for losses that may result as a consequence of trading on the basis
of this analysis.
______________________________________________________________________________
| 
