Silver Market Update: Despite Downturn, Silver Market Looks Positive

Following on from the gold article posted earlier today: Gold Market Update: “Going Off the Rails”, this is a corresponding article on silver’s current technical indicators.

The recent pullback may have already been enough to set silver up for further gains…

 

Silver Market Update: Despite Downturn, Silver Market Looks Positive

Originally published September 5th, 2016 in the Various Reports Sector at Clivemaund.com

Silver has reacted back as predicted in the last update about a month ago. On its 9-month chart below we can see that it broke down from an intermediate top as expected to drop back towards the important support shown, but on Friday it had a good rally which suggests that it may not drop that far, and could turn up again here. Overall this is a positive looking chart and the main question is which uptrend channel it adheres to. As we can see there has been a significant price / time correction since early July that has served to completely unwind the earlier overbought condition, so Friday’s turnaround could mark the beginning of the next upleg. Even if it should head lower again soon, it is thought unlikely that it will drop below the support at and below $18.00, especially as it is underpinned by an important channel support line. Should it drop that low silver would look most attractive.

Silver 9 month chart

The long-term 10-year arithmetic chart gives us a much broader perspective. This is actually a very positive chart overall, for as we can see silver’s bearmarket phase from 2011 has definitely ended. However, it has risen quite sharply in recent months to arrive at a zone of significant resistance, so the current reaction is quite normal and should set it up to break above this resistance and continue higher.

Silver 10 year chart

The silver optix, (optimism) readings have eased significantly from high levels that made further gains difficult. The current readings at about 56% make renewed advance much more possible.

Silver optimism

Click on chart to popup a larger clearer version.

Chart courtesy of www.sentimentrader.com

COTs and Hedgers positions continue to run at a high level and be a cause for concern, although they have eased a little in recent weeks. Such readings usually, but not always, lead to a substantial drop, so we should keep this in mind. On rare occasions they stay high as the uptrend continues. Therefore current readings won’t necessarily prevent a rally here, but can be expected to act as a restraining influence especially if they get even more extreme.

Silver hedgers positions

Click on chart to popup a larger clearer version.

Chart courtesy of www.sentimentrader.com

End of update.

About the Author:

Clive Maund is a specialist of technical analysis. His website, www.clivemaund.com, is dedicated to serious investors and traders in the precious metals and energy sectors. It offers no nonsense, premium analysis to subscribers. It is 100% subscriber supported, and takes no advertising or incentives from the companies it covers. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis. Happy trading.

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