Silver: Technical Analysis.

Silver's price has exploded upwards and James Turk is probably right in saying that "the silver shorts are losing control". With more believing in the long term uptrend of silver and shortists forced to cover their positions, silver could go much higher. Silver at US$50 an ounce in 2011 is the stuff of idle chatter now.

Looking at the chart above, it is easy to see lower highs on the MACD as silver broke US$30.00 an ounce towards the end of 2010. The negative divergence suggested that a correction was coming and it did happen. So, it was fortunate that I sold some silver when I did in December 2010.  See: How is my investment in silver doing?

Silver then went into a downtrend that did not last very long. It was in the region of about US$27.00 an ounce, approximating the 100dMA, that it bottomed in late January. I was waiting for it to go lower towards the 200dMA before accumulating but it never did happen. This was unfortunate for me. See: Silver broke short term resistance.

What this means is that many who were waiting for the same correction towards the 200dMA would not wait during the next correction. The 100dMA is now psychologically a strong support. Buy on every pullback is the mantra for silver investors now and chances of the 100dMA support holding up are higher now.

For anyone thinking of getting some exposure to silver now, buying on any pullback remains the prudent thing to do but waiting for a deep correction before buying in could be a mistake if my recent experience was anything to go by. The current supports for silver are at US$32.00 (20dMA), US$30.10 (50dMA) and US$28.33 (100dMA). Good luck!