Silver hits important longer-term support: this year's bull trend to resume?
Silver has collapsed since July/August. It’s interesting to note how the 100-day moving average (the blue line in the daily chart below) acted so well as support in September. Once this support was broken the silver price immediately collapsed to the red nine-month trendline dating back to January 2016.
This coincided with the red 200-day moving average. We hovered above this area perfectly, before the price managed a recovery to the blue 100-day moving average in mid-November.
Having been such effective support since the price crossed above the 100-day moving average in February, it became effective resistance as we topped exactly here. The price plunged through the two red support lines as the US dollar rocketed on the Trump effect. Interestingly, however, we then hit the green 500-day moving average at $16.40/35.
This important support coincides with the equally important 61.8% Fibonacci. This takes the December 2015 low at $13.60 to the July high at $21.10. We can see this more clearly if I zoom into the daily chart below.
If there is going to be a resumption of the bull trend, as I expect, this is going to be the low for the correction. As a further confirmation, on the weekly chart we are holding the blue 100-week moving average. We can see this in the chart below.
Silver: the year to date
I believe very strongly that we are witnessing the start of a new bull market for silver this year. You know this very well if you have been following my weekly articles.
If you need a reminder of my reasons for picking a bottom in this market at the start of 2016, have a look at the monthly chart below. Silver had collapsed to the 200-month moving average (the red line) and the 11-year trendline going back to the beginning of 2004.
Have another look at the weekly chart above. Can you see the bullish inverse head and shoulders pattern? This formed from Q3 2015 through to Q1 2016, highlighted by the red arrows. The rounding head clearly forms in December 2015/January 2016. This is a very clear end/reversal of trend and played out as expected.
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