price has settled at the bullish channel's support, while stochastic keeps moving in the oversold area. Therefore, there is the chance for resuming the main bullish bias in the upcoming sessions. We keep the bullish scenario valid and active until now, targeting 18.40 level as the next main station. The price needs to shrug off the negative pressure that was formed by the EMA50 to reinforce the positive expectations. At the same time, the bullish trend will remain valid unless breaking 16.80 then 16.56 levels and holding below them. The expected trading range for today is between 17.20 support and 17.43 resistance.
Silver continues to head higher from inverse H&S formation ( Weekaly)
Riding higher within parallels
18.50-ish next area in focus with further strength
The other day when we looked at silver it was trading right around the 200-day MA; a form of resistance we viewed as minor when considering the broader forces at work following the breakout from the two-month-long inverse head-and-shoulders pattern.
The US dollar is helping (now), but not sure how much it matters at the moment. Just a couple of days ago the two-week correlation between the dollar and silver stood at a positive 78%. Fancy that. The two can move together. This is why watching correlations out of the corner of your eye is a good thing, and not getting overly caught up in them; especially in the short-term.
Silver is riding higher along an upper parallel just above the 200-day. The upward sloping level of resistance shouldn’t be much of a factor if we are to see the eventual target at 19; this is not only the November peak, but also the measured move target based on the depth of the H&S formation. The concern is the area around 18.50, as we’ve discussed before, where lies the biggest threat to stopping the advance prior to reaching the target. The low from August and several daily closes in November have made 18.50-ish important.
Short-term, there is a parallel to the top-side line which is helping keep silver moving ‘neatly’ higher. A break below there and an undercut of the most recent swing low on 2/15 at 17.73 would bring the short-term picture into question. But overall, it would require an aggressive reversal lower to hit pause on the broader advance.
Silver price trading settles above 17.43 level that forms an important support base for the intraday trading. The price remains organized within the bullish channel. It waits for resuming the bullish wave according to the trading rules within the price channels. The main targets begin at 18.30 and extend to 18.80. In general, we will keep the bullish bias preferred unless witnessing clear break and stability below 16.95 and 16.56 levels. It points that breaking these levels will push the price to head to 15.49 before any new positive attempt. The expected trading range for today is between 17.15 support and 17.80 resistance.
Short-term, there is a parallel to the top-side line which is helping keep silver moving ‘neatly’ higher. A break below there and an undercut of the most recent swing low on 2/15 at 17.73 would bring the short-term picture into question. But overall, it would require an aggressive
Two signs of weakness in the miners are visible in the weekly candle charts below. First, while Gold has already rallied back to its high the first week of February, GDX and GDXJ are down 11% and 15% respectively. The miners and the metals will not always be perfectly aligned but that is a rather stark divergence. Secondly, although Gold closed at the highs of the week in each of the past two weeks the miners failed to hold their gains. This is not exactly the type of price action that inspires more gains in the short term.
Gold stocks are also showing some internal weakness. In the chart below we plot the advance/decline (A/D) line for GDX and its bullish percentage index (BPI). Both are breadth indicators. The A/D line is the holy grail of leading indicators while I have found the BPI to be more of a confirmation or overbought/oversold indicator. At present, the A/D line is below both its 50 and 200-day moving averages which are flattening and soon to slope lower. That is ominous if the A/D line can’t regain those moving averages. Meanwhile, the BPI is only at 36%. This means it has room to move up but it also shows weakness as it has barely changed despite gains in recent weeks.
Part of the cause of weakness in the gold stocks (and relative strength in Gold) is the weakness in the stock market which is actually a welcome and positive development for precious metals. As we discussed in a recent video, precious metals are currently setup to benefit from weakness in the stock market as they were in the 1970s and early 2000s. Patience is needed though as stock market weakness is not necessarily an instant or immediate catalyst for the gold stocks.
The current weak technical action in the gold stocks is further evidence that precious metals are unlikely to see a blast off anytime soon. Gold could continue to rally on the back of stock market weakness but don’t expect that to pull miners much higher. I reiterate that at present it’s not wise to chase strength in the miners. Instead, traders and investors should be patient and wait for (presumably) lower prices and a better entry point. We continue to look for high quality juniors that we can buy on weakness and hold into 2018. For professional guidance in riding this new bull market, consider learning more about our premium service including our current favorite junior miners.
Silver price managed to surpass 18.00 barrier and settled above it, which supports the continuation of the bullish trend scenario on the intraday and short-term basis, waiting for testing 18.30 level initially. That points that breaching this level will push the price to visit the bullish channel's resistance that located at 18.90. The price might witness some temporary sideways fluctuation affected by stochastic negativity, but in general, we keep preferring the bullish trend unless breaking 17.43 then 17.05 levels and holding below it. The expected trading range for today is between 17.80 support and 18.30 resistance.