In this post I’ve updated the charts to reflect the recent dramatic changes in the silver market.
Chart 1. Silver Weekly: Triple Support
Chart courtesy of tradingview.com
On the weekly chart above, there is a mixture of reconstructed trend lines (gray lines) set in the previous update and newly added lines, which highlight the important support levels nearby.
The silver price has passed the double support (gray former resistance + gray support) set at the $17.5 mark like a hot knife through butter two weeks ago. The three red bearish weekly candles from the top erased all of the earlier gains and even broke below the previous low at the $16.84 mark.
The next important support area is located at the intersection of the three lines. The first is the orange dashed line at the $15.74 level, which represents the blue downtrend’s breakout level. This area already supported the metal twice – last May, when the price made a pullback after the breakout last December, when the large correction had reversed.
The second is the red trend line support at the $15.60 level, which connects two consecutive lows in December 2015 and January 2016. And the last one is the black line, which highlights the previous low (December 2016) at the $15.64 mark.
Chart 2. Silver Daily: Backup Plan
Chart courtesy of tradingview.com
This is an update of the daily chart posted in the middle of the March. Initially the price moved to the upside, according to the first option breaking above the Wedge’s resistance (black) beyond the $18.05 mark, but it turned out to be a false break. The price hit the $18.65 level and then sharply reversed down, initiating the backup plan – a complex correction (highlighted by the orange zigzag).
It is ironic that the trajectory of the silver price has repeated the shape of the orange zigzag that I added almost two months ago. The correction has already hit the deepest level of the Fibonacci retracement at 78.6% ($16.25). Below it, there is only one last support located at the previous low at the $15.64 mark which is fortified with the former resistance line (red).
The RSI indicator dipped to a very low level at the 20 mark, below previous troughs. The price is currently above the 78.6% Fibonacci level. We should watch the further price action to see if the metal will check the support or reverse ahead of it.
Chart 3. Silver 4-Hour: Still In The Trend
Chart courtesy of tradingview.com
I would like to finish today’s analysis with the 4-hour chart above as big changes start from the small moves and the lower time frame chart could help us to spot such moves on time.
In the 4-hour chart of my previous update the price had started to develop a downtrend. In today’s chart, it is labeled as the blue AB segment contoured with the blue converging trend lines. It has finished at the $17.61 low on the 23rd of April 2017. Then the upper trend line was broken and price reached the $18 mark, but couldn’t take hold there and dropped again.
Currently the price is fluctuating within the red downtrend channel labeled as the CD segment. It is clear that this segment is way longer than the AB segment as it already hit the 1.618 (Fibonacci ratio) of the distance of the AB segment. The next ratio, highlighting double distance is located at the $15.93 level. After that there is a 2.272 ratio at the $15.65, which coincides with the previous low level at the $15.64 mark.
The RSI indicator already has the Bullish Divergence with the price drawing higher tops on the sub chart while the price is making lower peaks. But this is not enough to reverse the market. Firstly, we should watch to see if the downtrend is broken, which not a case is yet. I think the price is now consolidating within the $16.18-16.52 range. The breakout of it would give us a clue of further direction.
Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
Remember the old days back in Las Vegas when the Italian Mob had the SKIM going at all the Casinos? This is pretty much what has been going on in the Silver market for the past few decades. Just like back in the 60's & 70's, Back then, just like today, everyone new about the Skim, but could do nothing about it. It took the feds a long time to finally run the Mob out of Vegas and I think the Silver market will take the same amount of time before the Silver Skim is done and over with.
Until JP Morgan and the other commercial banks dump their Short position, silver is going no where without a major world event. Technical analysis, mining production numbers, recycled numbers and any type of enthusiasm by the general public mean nothing in this market any more. Take your vitamins, eat healthy and try to outlive the Silver Skim. Many long time Silver Bulls went to the grave without seeing the true value of their Silver. Will you be one of them?
Its impossible, IMHO, to try and explain either gold or silver trends/projections when they are clearly in a rigged (naked shorts) market. The old cyclical and technical explanations are useless.
yes, the short term trend for silver is clearly bearish.
silver is the most undervalued asset on earth. even better
than gold. the cheaper it gets, the more of a bargain it is.
we'll look back on 2017 and $16 silver in disbelief.
you have to own physical bullion you hold in your own hot
little hands though. paper silver is just that- paper.
Gee I've never heard that before.
I am thinking about descending triangle on hourly chart and waiting for its downward breakout