Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin, Gold and Silver Markets Brief - 18th Feb 25
Harnessing Market Insights to Drive Financial Success - 18th Feb 25
Stock Market Bubble 2025 - 11th Feb 25
Fed Interest Rate Cut Probability - 11th Feb 25
Global Liquidity Prepares to Fire Bull Market Booster Rockets - 11th Feb 25
Stock Market Sentiment Speaks: A Long-Term Bear Market Is Simply Impossible Today - 11th Feb 25
A Stock Market Chart That’s Out of This World - 11th Feb 25
These Are The Banks The Fed Believes Will Fail - 11th Feb 25
S&P 500: Dangerous Fragility Near Record High - 11th Feb 25
Stocks, Bitcoin and Crypto Markets Get High on Donald Trump Pump - 10th Feb 25
Bitcoin Break Out, MSTR Rocket to the Moon! AI Tech Stocks Earnings Season - 10th Feb 25
Liquidity and Inflation - 10th Feb 25
Gold Stocks Valuation Anomaly - 10th Feb 25
Stocks, Bitcoin and Crypto's Under President Donald Pump - 8th Feb 25
Transition to a New Global Monetary System - 8th Feb 25
Betting On Outliers: Yuri Milner and the Art of the Power Law - 8th Feb 25
President Black Swan Slithers into the Year of the Snake, Chaos Rules! - 2nd Feb 25
Trump's Squid Game America, a Year of Black Swans and Bull Market Pumps - 24th Jan 25
Japan Interest Rate Hike - Black Swan Panic Event Incoming? - 23rd Jan 25
It's Five Nights at Freddy's Again! - 12th Jan 25
Squid Game Stock Market 2025 - 5th Jan 25

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bullish Technical Signals Support Silver and Gold Prices

Commodities / Gold and Silver 2012 Jan 25, 2012 - 05:54 AM GMT

By: Dr_Jeff_Lewis

Commodities Best Financial Markets Analysis ArticleSeveral closely watched technical factors played a substantial role in precious metals trading last week as traders noted that increasingly bullish signals of an impending rally accumulated strength.

It is our conviction that ultimately the physical market will trump paper and drive technical traders, which in term will set-off the algorithm-funds, leading to significant moves higher or as we like to frame: a return to real equilibrium.


Technical analysts pointed to a bullish potential chart pattern in silver’s price combined with a down trend line break, as well as gold’s price breaking above a key long term moving average, as supportive technical signs for the precious metals.

Furthermore, both of the recent corrective upwards trends in silver and gold prices have been reinforced by gradually increasing levels observed in their respective Relative Strength Index or RSI readings, without the rallies yet having pushed the key momentum indicator into overbought territory above the 70 level for either metal. 

These observations indicate that the most recent technical rally seen in these metals since their late December lows may well have further to go. 

Technical Buying Ahead of Support Sends Silver Above Important Trend Line

To start with, the price of silver continued its short term upwards trend and has managed to break — and thus far hold safely above — a significant downwards trend line that had been limiting upside price action since the intermediate peaks of September 2011.

The downwards slanting line can be drawn between the September 5th spot price peak at 43.36 and the December 8th 33.21 peak and the price action demonstrated several close tests and reversals to the downside ahead of this line before the notable break above it occurred on January 10th. 

Technical analysts also noted that this trend line break was confirmed by rising trading volume observed in silver on the day of the event.

Potential Double Bottom Pattern in Silver Also Improves Technical Picture

Technical silver buying has also emerged in recent sessions due to a closely watched price reversal ahead of key support in the 26.05/15 region that could indicate the grey metal is in the process of forming a classic double bottom chart pattern with a neckline in the 35.66 region. This level also roughly corresponds to the current reading of its 200 day Moving Average.

That closely watched long term indicator — which currently reads at the $35.72 level and is showing a decidedly downward slope — still yields a bearish outlook for the grey metal. Nevertheless, a sustained break above it would improve the technical picture for silver considerably, especially due to the presence of a possible double bottom neckline in that region.   

Furthermore, the computed measuring objective of a future sustained break of that double bottom neckline is $39.56 and would be projected upwards from the neckline to yield a technical target in the $45.22 region.  

Gold Sustains Gains Above Key Moving Average, While Silver Still Below

Another classic bullish signal seen in the precious metals recently that has prompted significant technical buying has been the break in the price of gold above its key 200 day Moving Average. This notable bullish signal, which is further supported by a continued positive slope in the indicator, occurred initially on January 10th of this year during a supportive period of rising volume.

Although the spot gold market has since dipped below the indicator intraday, the price has thus far generally sustained gains above it on a closing basis, and the yellow metal now seems set to test a key declining trend line currently drawn at the 1688.93 level. 

A break above that line would send another important bullish signal to technical traders, with a potential double bottom neckline providing subsequent resistance at the 1802.63 level supported by two key reversal lows at the 1522.55 and 1532.15 levels.

Nevertheless, silver’s spot price has yet to climb above its 200 day Moving Average that it fell sharply below in its latest managed price crash that occurred on September 22nd and 23rd of 2011.  

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2012 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in