Saturday, 25 June 2011

Silver: Trying to find a base.

What's happening to silver's price at US$34.64 an ounce?

One reason why I have not been blogging much about silver is because there is nothing very much to say. My last blog post on silver still says very much what I would say today.

The big difference is that price is no longer above the 100dMA and has to look to the 200dMA for support. Also, in my last blog post, I said that the 50% line in the RSI has been established as a strong resistance and that price could have a harder time climbing higher. This has turned out to be true.

If we look at the price action, it has formed a series of lower highs and we want to be cautious if we are on the long side. It suggests a lack of conviction on the part of buyers. What about sellers? It would not be wrong to assume that sellers are waiting for the long term support provided by the 200dMA to break before they take action. This is currently at US$31.63 an ounce.

What's my strategy? Wait and see.

Some numbers:
50dMA: Flattened and downturning. US$38.46 an ounce.
100dMA: Rising. US$36.63 an ounce.
200dMA: Rising. US$31.36 an ounce.

Related post:
Silver: Wait and see.

Sunday, 12 June 2011

Silver: Wait and see.

Silver closed at US$36.20 an ounce. This is closer to the support provided by the 100dMA at US$35.83 an ounce than the resistance provided by the 50dMA at US$39.22 an ounce.

The weakening momentum observed in my last blog post is confirmed by the RSI which has been unable to overcome resistance provided by its 50% line.

The 50% line is now established as a many times tested resistance and likely to be quite strong, therefore. This, in turn, suggests that price could have a harder time climbing higher.

Although the MACD has averted a bearish crossover with the signal line in negative territory, its distance with the signal line seems to be narrowing. The negative momentum although mellowed is still very much in force.

Since my last blog post, my strategy has not changed and I would wait and see.

Related post:
Silver: Weakening momentum.

Saturday, 4 June 2011

Silver: Weakening momentum.

The price of silver seems to be consolidating as the initial rebound off recent lows loses momentum. This is quite obvious as the MACD formed a lower high in negative territory and seems ready to form a negative crossover with the signal line. The fact that the MFI has turned down at the 50% line reinforced the picture of weakening momentum.

In light of this development, I am keeping an eye on the 100dMA which is at US$35.44 an ounce now. In the event that this support is breached, we could well see the long term support provided by the 200dMA tested. If the 100dMA should hold up decisively, we could see the flatlined 50dMA tested as resistance next. This is at US$ 39.26 an ounce currently.

What am I doing? Nothing for now. I would like to buy more silver when the signs are more reassuring. Currently, the situation is somewhat dicey. For anyone who would buy at the 100dMA if it should be tested, he would be betting that the support would hold and if it should hold, not only could the 50dMA be tested as resistance, we might see it even broken as, potentially, we have a reverse head and shoulders pattern on hand. Notice that I said "bet" because that is what it is.

For me, I would like to see a positive divergence formed between price and the MACD, that is a lower low in price and a higher low in the MACD. This would give me greater confidence to add to my long position in silver although it would still be a "bet" but a bet with a greater probability of success. TA is, after all, about probability and not certainty. Good luck.