By The Gold Report
Technical analyst Clive Maund charts the recent downturn in silver, but also sees reason to be optimistic about the market going forward.
Silver has reacted back as predicted in the last update about a month ago. On its 9-month chart, above, we can see that it broke down from an intermediate top, as expected, back toward 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 up-leg. 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.
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 bear market 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.
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.
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.
Chart courtesy of www.sentimentrader.com
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the content preparation or editing so the author could speak independently about the sector. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.
Charts provided by Clive Maund
Streetwise – The Gold Report is Copyright © 2016 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.
101 Second St., Suite 110
Petaluma, CA 94952
Tel.: (707) 981-8999
Fax: (707) 773-5020