Friday, November 27, 2009

Silver Could Be on One Heck of a Ride!

Silver Spot Daily Chart
Silver Spot Daily Chart November 27, 2009
Chart is courtesy of marketclub.
Marketclub - Silver Spot Trend Analysis Marketclub - Silver Spot Trend Analysis (What's this?)

Couple of highlights, well,...a lot of highlights on this chart actually. The most important ones on this chart however would be the divergences. Take a look at the chart and in particular last year August 2008. You'll see the red line I've placed there following the lower lows silver is making. This line is thus sloping downward.

Tilt your eyes a bit down and look at the other red line below the MACD. That line is making higher lows. So, there is a divergence because the MACD is advancing upwards before the stock is doing so. The stock at that moment is still trading downwards. Taking a clearer look at the MACD you'll see it was making higher lows so there was a positive divergence emerging.

100 Ounce Silver Bars Johnson Matthey and Englehard - Copyright © 2009 Northwest Territorial MintAs the naming implies, positive,...meaning a bullish signal. A divergence is also a clearer and more reliable signal then a simple MACD crossover. Even then, there are also different levels and strengths of signals, for instance, a crossover on the center line is a stronger signal than a crossover in the lower or upper zone while a divergence beats any crossover as to signals.

Now, move your eyes to the right to last September, notice the red line making higher highs? Now look down and take a look at the MACD. That one is making lower highs. So we have a divergence again. This time the MACD is down trending while the stock is still making higher highs. This is what is called a negative divergence and thus a bearish signal.

October 19th is when I would have gotten out when I would have been long. Taking some profits off the table and waiting for confirmation of the signal. This case, the divergence did in fact turn out to be a bearish signal as the stock made a clear break downwards from October the 25th.

So, look for those to aid, not to guide!

I've also drawn a resistance line across the chart at 18.00 which coincides with earlier points of support and resistance. Now, it is a resistance but one which soon will be broken and with great ease.

For now, I'm looking at a retest of either the 10 Moving Average or the bottom of the trend line which would be anywhere around the 17.00 level.

Do not however expect too much downward pressure on silver or gold as that will not happen. Up is still the trend. Short term thus maybe a little bit down but when we've taken our little breather I expect us to be trading back to where we left of sooner rather than later.

Silver Spot Weekly Chart
Silver Spot Weekly Chart November 27, 2009
Chart is courtesy of marketclub.
Marketclub - Silver Spot Trend Analysis Marketclub - Silver Spot Trend Analysis (What's this?)

Weekly is as usual where the magic happens! Silver's chart is no different here cause looking at this one is just like reliving October the 5th all over again. We are already trading above 18.00 and we are looking for a definite break above 18.00 on the weekly chart. Could silver finally be on the brink of making some of the same steady gains gold has made comparatively?

With that I mean, gold has since last year October 2008 not only reached its all time high, it has completely smashed it to smithereens! Silver has yet to hit that all time high but could be on the verge of doing the same. Don't know what will happen but the chart is telling me silver has some catching up to do and chart wise things are really lining up for a possible major increase or case of playing catch up.

Bullion Johnson Matthey 100 Ounce Silver Bar - Copyright © 2009 Northwest Territorial MintYou can also see the upper trend line going up from October 2008 and after breaking that trend line in June 2009 and going further down we've made our new lower trend line which has held from July on.

What I'm looking at is adding an even higher trend line to the chart which should tell you I'm already looking at a silver price of 21.00. When silver breaks the upper trend line and thus breaks the 19.00 then getting to 21.00 is like talking a walk in the park.

MACD is trending up but the gap is not getting wider. Not yet anyway...that will come...only a matter of time. Just need to drop a little before taking out 19.00 and heading for higher highs.

Looking at both charts I'm extremely bullish on not only most silver juniors but as an investor in Orko Silver, of course also very bullish on the markets reaction towards Orko Silver when the spot price of silver is looking to break 19.00 and more to come in the weeks ahead.

Now, I have no crystal ball but I do try to recognize turning points and have on occasion spotted them in the past so maybe just need to go with the flow.

Last thing, don't get scared riding gold or silver's wave. To those who've followed today's action in gold will know that any down attempts are quickly brought back up again. Like clockwork. Too much basis and fundamentals for gold not to go higher. My 2 gold-nuggets then.



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