I do not expect this to be a popular view, given the excitement of the rally on metals in general in recent weeks. But no trend lasts forever and we’ve not really seen much of a pullback on silver prices lately. Besides, silver has risen nearly 40% since the September low and fast approaching the upper trendline from a wide (slightly bearish) channel. The tendline also resides near the monthly R1 pivot and $25.
Prices are holding above trend support on the daily chart, but a bearish divergence has been forming with the RSI (14) as its rally has lost steam over the past couple of weeks. A bearish pinbar also suggests bulls are losing control, so we’re now waiting to either see momentum turn lower or provide a series of bearish reversal candles below $25.
The main issue with trying to pick turning points are it can leave one vulnerable to a series of false entries and/or giving up before the turn. Therefore, bears may want to use smaller positions with a wider stop, and fade into spikes below $25 before increasing exposure if momentum does finally turn lower. Alternatively, bears could wait for a break beneath the monthly pivot point to confirm a trend reversal on the daily chart.