After taking a look at the ups and downs of the silver market pre- and post-election, technical analyst Clive Maund sees a major opportunity developing.
Silver had actually broken down from its uptrend at the time of last update, and well before the U.S. election. But it was thought to look positive going into the election because it was ascending off an important support level and from a rising 200-day moving average. The outcome may have been positive had Trump lost as expected, but he won, which triggered a sharp rally in the dollar and an about face and plunge in both gold and silver.
On silver’s 1-year chart, we can see how silver was on the point of battling its way back into its failed uptrend at the time of the election. But Trump won and it caved in, breaking below an important support level and well below its rising 200-day moving average, which had earlier supported the price and set off a doomed rally.
Now silver has arrived at the lower boundary of a newly delineated downtrend, and is closing on the next important support level at a time when the dollar has arrived at an upside target. All this, plus the fact that the price is now below a rising 200-day moving average suggests a high probability that it will turn up soon. This is made even more likely by extremely low sentiment readings toward mining stocks, with the Gold Miners Bullish Percent Index (shown in the companion gold market update), at a very low 7%, which is way below where it was before the big sector rally started back last January.
The advance by silver during the first half of the year is regarded as an impulse wave, or a move in the direction of the primary …read more