The RSI recently hit 70 and has remained above 50 during this consolidation. It definitely needs to push above 70 in a breakout scenario. In the breakout scenario the medium target becomes $51.
For SIL and the silver stocks we use the 200-day moving average. That average provided support in November 2012 but then resistance in February 2013 and then for the summer rebound in August 2013. SIL has now reclaimed the 50-day moving average and is in position to retest the 200-day moving average. Again, look for the RSI to confirm the breakout. In that scenario, the next resistance target becomes $16.50.
The near-term analysis is quite simple. The 50-day moving average appears to have become strong support for these markets which appear ready to test what has been resistance over the past 13 months. Note how that resistance (the moving averages) is no longer declining but is flat or flattening. That illustrates how the downtrend is all but over. A strong close above the moving averages will all but confirm that the downtrend is over and could more importantly lead to some very strong moves. GDX at $24 has an upside target of $31. GDXJ at $37 has an upside target of $51 while SIL at $12.50 has an upside target of $16.50. Keep an eye on these markets as a breakout above these moving averages would be quite significant.
This article is brought to you courtesy of Jordan Roy-Byrne From The Daily Gold.