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
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Silver's Roadmap

Commodities / Gold and Silver 2016 Nov 08, 2016 - 04:11 AM GMT

By: P_Radomski_CFA

Commodities

History tends to repeat itself and the more similarities to a past pattern we have, the bigger likelihood that it will continue to repeat. The day-to-date price swings of silver may seem erratic, but from a broader point of view, they are repeating – to a great extent – the same pattern that we saw in the past. The most interesting thing is what followed that past pattern.


Let's take a look at the charts (charts courtesy of http://stockcharts.com):

Before discussing the latest developments, let's quote what we wrote about silver's projected price path on October 7:

(...) We can now see that comparing the current downswing to the previous medium-term ones does not have bullish implications.

The important thing about this decline is where it started – it started when silver topped with the RSI above 70. That's not something that happens often and consequently it's critical to check what tends to happen next once such a situation materializes. Long story short – silver declined after such cases, but the most important thing is that after the $50 top we saw only one similar case – the 2012 top and the 2012 – 2013 decline. Actually, we wrote about the similarity of these declines a few times in the past months. So far the analogy holds.

The late 2012 top and the 2016 top were followed by some sideways trading, then an initial small decline, then a rally close to the previous high. The sharp decline followed in both cases. In the past, silver was only one small (smaller than the previous ones) correction away from the big slide.

When and where did silver bottom in late 2012 before the final small correction? After 14 – 16 weeks (depending on how we define to bottom – weekly closing price or the intra-day price), below the 50-week moving average and with the RSI at about 40 (...).

Right now silver is in the 13th week of the decline, still above the 50-week moving average and the RSI is at 44. Silver appears to be relatively close to the bottom (the majority of the decline seems to be behind us) but may not be at it just yet.

We wrote the above after silver ended the session at $17.34. That was indeed the final bottom in terms of the daily closing prices and the final bottom in the case of intra-day lows formed on the following day.

What happened next? The self-similar pattern was upheld. Silver rallied in both late 2012 (and early 2013) and in the past few weeks. Since the very similar pattern remains in place, what happened next in the past is a likely roadmap for what lies ahead.

Back in early 2013, silver topped after:

  • Moving above its 10-week moving average.
  • Correcting a bit more than half of the preceding short-term downswing (Back then it corrected 61.8% of the late-2012 decline, and now silver has corrected either 50% of the rally or 61.8%, depending on which moment we use as the starting point of the decline. Using silver's early-September high as the starting point, we get the 50% retracement, and using silver's September 30 intra-day high as the starting point, we get the 61.8% retracement).
  • The RSI moved a bit above the 50 level.

This time, we have already seen these signals and consequently, silver appears to be ready for the next part of the pattern – a huge decline.

The very characteristic trait of the 2013 decline in silver is that it had very few upswings (and rather insignificant from the long-term point of view) before it was really over – several months later. This could be the case also this time, but doesn't have to – the self-similar patterns are generally getting less reliable when one is trying to make a more long-term-oriented prediction (the closer the prediction date or the price path to the current moment, the greater the impact of the pattern is likely to be).

As far as gold is concerned, we received a question about the MACD and PMO indicators and their recent buy signals (whether they invalidate the bearish outlook).

In short, they are both useful short-term indicators, but since the current situation is similar to what happened in early 2013, they may work... as in 2013. Back then the buy signals from the MACD and PMO were followed by short-term rallies in gold and themselves, but these rallies were followed by much bigger declines.

We marked the levels to which both indicators rallied in early 2013 with horizontal lines. The MACD indicator is already at the upper of the lines and the PMO is right in the middle thereof. Consequently, in light to the analogy to 2013, it seems that the top in gold is already in or at hand.

Overall, the implications are very bearish for the coming weeks and months.

The above estimations are based on the information that we have available today (Nov. 7, 2016). We will be monitoring the market for opportunities and report to our subscribers accordingly.

Thank you.

If you'd like to join them, we invite you to subscribe to our Gold & Silver Trading Alerts today. If you're not ready to subscribe today, we invite you to sign up to our free gold mailing list – you'll receive our Gold & Silver Trading Alerts for the first 7 days as a starting bonus.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com
Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 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