Sellers may look like they are in control with the large range decline yesterday, but they are not in control from a simple technical measure that I like to follow. If you track the levels where the market gets oversold and those levels are at higher and higher levels, then you are in an uptrend. This is what we are seeing in Silver now. So, because the reading of -100 in (11) is at 16.92 versus the previous levels of 15.67 and 15.45, we can say that the market is in an uptrend. I have also marked out the levels where the sellers have driven the market down to oversold (in light red).
After silver finds its balance again after the latest round of selling on expiration week to stop out the weak speculators, silver looks very strong to begin its upward march again to continue the 17.46% gain it had YTD back on the 22nd of January.
Also - I have plotted green lines to mark all of the levels that are good support areas from where buyers have driven the price of silver up to overbought levels.
With rates falling to negative in the Eurozone, it makes the argument for owning metals that much more compelling, especially on top of endless quantitative credit-expansion. The quantity of currency floating around versus the quantity of metals available is shifting dramatically in favor of a longer term rally in the metals (silver-gold-platinum). Only one caveat is that lower oil prices makes the production of gold cheaper, which may spur additional production and supply to the market due to the increase profit margin from mining gold .
If the price of silver gets much under $16, then I will need to reign in my shorter term bullishness for silver . I noted on the chart a more conservative target that was reached using the "Time at Mode Methodology" by eliminating the massive spike down to $14 overnight in Silver back on December 1st. You can see the market topped out at that level and is pulling back towards the most frequent price around the $16.50 area.
Tim 9:03AM Friday, January 30, 2015 16.88 last