Silver Spot Daily Chart
Silver Spot Daily Chart February 12 2010
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On the daily chart I tried to highlight some points in time where silver was trading around this 15.00 level. Seems to be little doubt from the chart that the 15.00 level plays an important role. Either as a very heavy resistance or a very very big support. So that would mean somewhere around where we are could indeed be the right spot if ones desire was not to meet a buyer, not several buyers, not multiple buyers but a whole truckload of buyers, and with truckload I should say convoy of trucks with each a truckload. Just so as to make it very clear.

At least, if I had the money I would already be backing up my trucks, beep beep beep,…loading up them silver bars.

But that’s me then. Call me stupid but I think if ever I called something a bargain before then I must have been in error, so forget that, scratch that article out of your head.

LOOKIE HERE! Silver at bargain prices!!

Another look at the chart and in particular the Relative Strength Index, you can clearly see silver dipping below the 30 level in the oversold zone, reaching 25 and heading back up again due to renewed buyer interest. Also, please do not take this as an advice to always buy something when it is in oversold cause it does NOT work like that.  Looking from the chart you can clearly see some points where buying while getting below 30 would have been a very big mistake…depending on your choice of investment of course.

Well, just don’t rely on RSI while in a down trend cause there is always another level down.

It’s hopeful but RSI is not what I look at here but it is worth a mention.

The blue arrows represent the negative divergence which was in the works on the silver chart starting from mid-September to late December and indeed confirming the start of a bearish time for silver.

ADX does show some sort of turn around. Again for those who are not aware of this indicator. Average Directional Index can determine trend strength regardless of the market direction. This non-directional oscillator is based on a range of 1 to 100 (although movements over 60 are rare). If the line is under the 20 mark, the trend is considered to be weak. If the line is above the 40 mark, the trend is considered to be strong. The ADX line is built on the results of two separate technical indicators, the +DI (force of up-moves) and the –DI (force of the down-moves). The default for this study is 14 periods which takes into the consideration the measurements of the +DI and –DI for the last 14 periods.

Applying that pearl of wisdom to the chart should tell you the down force has just failed to reach 40 and has since luckily fallen back. Now it is only a matter of time to watch more and more trucks pull up. There always has to be the first one. When you boil down to it, the market is nothing more than following each other around. Looking at the other one, hey, look,…he’s buying ‘Might Drop Corp.’

Lets buy that, it has a fancy name and he’s also buying. Look, another follower says,…and on and on and so the story goes.

The only difference with that story and our silver story is, we are not buying ‘Might Drop Corp.’, NOPE, we are buying ‘Will Rise Corp.’

At least, we hope we do. To really know for sure TA or Technical Analysis gets you a bit further then the map-less and clueless wanderer but it will never carry you all the way to your destination. Sadly, or I would already be a gazillionaire and would probably be boring you to dead while blogging from my island mansion about how my gold and silver bars glitter so eye-blindingly well under the Mediterranean sun.

One more indicator to go, MACD, well, this is below the center line which still is down trend territory but there are positive signs occurring on the chart. The histogram is getting choppier, no more steady increase. The blue line again is turning back up. I say again because it did this before at the start of this month. Wasn’t mean’t to be at that time though. Maybe this time we will pull through.

The following days and weeks will tell. The more days gold holds it out against even a rise in the dollar is the more likely we are getting to the point where ‘the investors’ AGAIN….ditch the dollar and get back into gold. I’d say won’t be long. But I should tell you, I have been diagnosed with active enthusiastic optimism syndrome so I could be off by a few days due to my condition. In that case, don’t blame me, blame the syndrome.

Silver Spot 5-minute Chart
Silver Spot 5 minute Chart February 11
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This is a quick screenshot of the 5-minute 5-day chart. Nothing much to see here besides maybe another historic point. Um, OK, smartypants, every point in the past probably is a historic point but I was sorta referring to a historic point with an added meaning. Not just a random moment in time. I’m talking about silver finding support at somewhere around 14.95?

To me worthy of mention in the history books.

Silver Spot Weekly Chart
Silver Spot Weekly Chart February 12 2010
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Weekly then to close off. We did break a trend line, the rising trend line which started October last year. That’s certainly not good but does not change anything about the long term trend cause that is still up, at least in my opinion then. We seem to be holding at the 50 MA and of course at the support level.

But, one always has to be careful with silver, anything can happen so don’t let 4 or 5 up days deceive you into getting a false sense of security. Always thread carefully. Not just with silver, do that with every one of your investments.

There is still a long way to go to get back to earlier highs. Should silver continue its rise from here I suspect there will always be a re-test or a pullback which would provide a safer entry.

Not much more I can tell you here. We will have to see what the next days and weeks will bring. Will silver slowly head back to the MA‘s? Will the support break?

Only time will tell. Sorry for the cliche ending but in these days it is better to wait for the right time.

YeOldGoldNugget’s links of interest

Will Silver Make it or Break it?
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