Silver: A Technical Perspective

silver demandMichael Noonan: All people in the futures markets are there to make money, [hedgers excepted], or they would not subject themselves so unnecessarily to the risks. Even buyers of the physical, Stackers, want to get as low a price as they can. More people are fundamentally inclined than are technically driven. As a consequence, they like to read articles that provide a degree of psychological comfort in support of their own view of the market.

With the onslaught of bullish news/facts/figures about silver over the past year, one need only look at where the price of silver is and ask, “How is that bullish information working out for you?” This applies less to buyers of the physical, but even they need an occasional reminder that even though price has declined, their end game is still in process.

It can be helpful to understand the market from a chart perspective because you will have a more accurate read for what to expect in the next week[s] or month[s], or until you see a change in the structure that signals an important move is underway.

While some of you may think it is difficult to read a chart, all that is required is a bit of common sense attached to the explanations we provided with each chart.

When will silver rise to higher values? Answer: No one knows. It has taken longer than most thought, and it will continue to take longer than most believe, but there is one thing for sure, the price of silver will retest the old high, and then proceed to exceed it, by at least a double.

It takes time to turn a market around, and silver is in that process. There is no degree of certainty that a bottom has been reached, but there exist at least a probability the recent lows may hold. Whether the lows hold or not, one cannot lose sight of why accumulating silver has been so important. When price finally accelerates higher, the trying of one’s patience will quickly be forgotten and all will be well.

The charts relate a story of the news/facts/figures, just in bar form. This is what the market is saying, as of Friday.

Everyone in the world who follows silver knows the importance of $26 for silver. Until price can rally and hold above it, do not expect higher levels. It is that simple.

There is a small 8 week base that is currently being retested by another small trading range. Whenever a trading range retests and holds above the previous one, it has a bullish connotation. Because silver is in an overall down trend, upside strength is not a dominate factor, so expect additional time required to develop a more overtly bullish character.

silver price chart weekly 8 november 2013 price

The two bars at rally high “A” showed EDM, [Ease of Downward Movement] on high volume, as price declined. At the current low of the decline, “B,” there is another high volume effort, but instead of showing EDM, the two bars overlap one another. When you see overlapping bars, it is indicative of a balance between the efforts of buyers and sellers. The fact that buyers were more responsive at the low of the correction speaks well for the prospects that support may hold.

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