Silver Update: Analyst Sees Short-Term Pullback Before Acceleration

Source: Clive Maund for Streetwise Reports 01/13/2020

Technical analyst Clive Maund charts silver’s progress in comparison to gold’s following recent world events.

Silver’s recent rally looks diminutive and stunted compared to gold’s, but that’s normal at this early stage of a new bull market, when silver typically underperforms gold due to investors being risk-averse and silver being perceived as more risky and volatile than gold.

Nevertheless, as we can see on its latest 6-month chart, silver did manage to break out of its reactive downtrend in force from early September. Last week, at the time Iran lobbed missiles at U.S. bases in Iraq, it had a go at breaking above its late September highs. But it was not up to the task and fell back, putting in a reversal candle on big volume, which suggests that it probably has further to fall short term—perhaps back to the upper boundary of the downtrend channel shown. But with the overall tenor of this chart positive, it should then turn higher again.

Wheeling out the 10-year chart once more, which gives us the big picture, we see that, although so far looking much more restrained than gold, silver appears to be ascending away from the second low of a giant double-bottom pattern. The advance out of the lows of last summer was on good volume, which has driven both volume indicators quite strongly higher. This is bullish and marks a breakout drive out of the base pattern, with a completed breakout being signaled by silver breaking above the resistance, approaching and at $22/ounce. A break above this level will usher in a period of much more dynamic advance.

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