Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Case for a Silver Price Rally

Commodities / Gold & Silver 2019 Nov 14, 2019 - 09:19 PM GMT

By: P_Radomski_CFA

Commodities

Yes, you read that right. Despite all the bearish developments that we described in the previous analyses, and despite myriads of bearish factors that remain in place for the following months, it seems that the white metal is about to rally. Gold, and mining stocks could move higher as well, and we’ll move to that shortly. For now, let’s talk silver.



In particular, we’re going to discuss the SLV ETF. This ETF has one big advantage over silver futures chart that we feature regularly. It puts emphasis on price gaps and shows only that trading which took place when the U.S. market was open. This distinction can be helpful in determining support and resistance levels as price gaps tend to provide such. In fact, the late-September bottom formed once silver touched the upper border of its price gap.

The SLV was attempting to break below the lower border of the gap and it has failed to do so three times. This serves as an indication that the white metal is not yet ready to break lower. The price gap on its own would not be strong enough to make the short-term silver outlook bullish all by itself, but that’s not the only thing that’s pointing to higher silver prices in the near term.

The RSI indicator (upper part of the chart) is close to 30, and that’s when silver’s short-term rallies used to start.

More interestingly, the Stochastic indicator just moved to levels that are low enough to indicate a short-term buying opportunity on their own. This simple technique worked very well in the previous 12 months. Almost exactly 1 year ago it confirmed a medium-term bottom, in early March it indicated a short-term buying opportunity, and in mid-May it was very close to pinpointing the exact bottom before the mid-year rally. We saw Stochastic close to the buy line also at the end of September, which doesn’t really count as a true bullish signal, but silver moved higher nonetheless. So, we have three out of three efficiency with a little bonus confirmation from about 1.5 months ago. While this doesn’t make a short-term rally inevitable, it does make it quite likely.

And now for the final silver sign – the time. Silver tends to move in a very specific way. It moves very fast for a few days, only to act very calm in the next several days. Some might say that it’s similar to how spiders move in terms of seconds. Personally, we find the silver view much more appealing… What does this have to do with the chance for a short-term upswing in silver? Quite a lot.

Silver already lost its downward momentum as its been calm for a few days now. This characteristic pattern is what we saw also when silver completed a broad top (just as it did recently) earlier this year. In early March, the fourth day of the calm after the storm, was actually a local bottom that was followed by a rally to the 50% Fibonacci retracement. Not a ground-breaking rally, but definitely something one would prefer to ride on the long side of the market rather than being short.

Just as one swallow doesn’t make a summer, one analogy to the previous decline isn’t necessary meaningful. But that was not the only case. Silver declined in a very similar manner after the 2016 rally.


As you can see, silver losing its downward momentum after a volatile decline was how practically all bottoms of the late-2016 decline formed. We saw the same thing in case of the first two important bottoms of 2017.

The silver seasonality also suggests that the short-term decline in the white metal might be over or close to being over as local bottoms tend to form close to the middle of November.

What does it all come to? It means that – as far as the next week or two are concerned – the outlook for silver just became bullish. In fact, we just wrote to our subscribers that we’re taking profits off the table in case of the short positions and in today’s Gold & Silver Trading Alert, we clearly outlined the details of making money on the upcoming upswing. These details cover positions in gold, silver, UGLD, USLV, GDX, NUGT, and JNUG.  And they can all be yours as soon as you sign up for our free mailing list – the 7-day full access to our Gold & Silver Trading Alert comes as an added bonus. Yes, it’s all free. Sign up now.

Thank you.
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits - Effective Investments through Diligence and Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 2005-2022 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