Technical Analyst Sees Weakness in Silver

By The Gold Report

Source: Clive Maund for Streetwise Reports   11/19/2017

Technical analyst Clive Maund charts silver and finds the signals contradictory.

At the same time that gold broke out of a coiling pattern to the upside
on Friday, silver broke out of a Symmetrical Triangle pattern shown on
its 6-month chart below. Volume was lacking on this breakout, however,
and the same reservations that apply to the outlook for gold also apply
to silver, namely that its COTs look more bearish then bullish, and that
Hedgers positions in the dollar index are still calling for it to
rally. On the other hand, gold proxy GLD did make a volume breakout on
Friday, and what’s good for gold is usually good for silver.

Although
these conflicting factors make the situation somewhat ambiguous, there
is a favorable trading setup here, because silver is still quite close
to the apex of the Symmetrical Triangle, so it is possible to open long
positions with fairly close stops beneath the apex of the triangle in
case the breakout was false. Gold’s price pattern now looks quite
favorable, with it looking set to run to a resistance level towards the
top of an uptrend channel, and if that happens, silver should follow
suit and advance towards its early September highs at about $18.25,
perhaps stopping short at about $18.00 for a reason we will observe on
its 2-year chart. Point for a stop for traders going long is about
$16.70.

On silver’s 2-year chart we can see that it looks considerably weaker
than gold, and its trend is at best neutral overall, and any short-term
rally is thought likely to top out close to the upper boundary of the
much larger Triangle shown on this chart at about $18.00. Such a rally
would “not be much to write home about.”

Although a near-term rally in silver in sympathy with gold looks quite
likely, we can see why it is unlikely to get very far on its latest COT
chart. COT positions on this chart look more bearish than bullish, and
any near-term rally is likely to quickly take them to extremes.

Click on chart to pop up a larger, clearer version.

The conclusion is that although silver may be starting a rally here, it
still looks weak compared to gold, and so the rally is thought unlikely
to get very far, especially as it is blighted by a still rather bearish
COT structure, and, like gold, continues to be threatened by a dollar
rally. So it looks like it will be going along with gold “just for the
ride.”

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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Charts provided by the author.