Sell Signal in Silver?

Feb 25, 2009: 9:02 PM CST

Did price trigger an official sell signal in Silver this week?  Let’s view the weekly and daily charts for any clues.

Silver Weekly Chart:

We’re seeing possible resistance at these levels, which corresponds with an early 2007 high but not much else since then.  It’s close to a 50% Fibonacci retracement from the $21 peak to the $8 bottom, but not exactly.  Truncating the spike highs places the 50% retracement at $14.65 (to the low) while incorporating the spike high places it at $14.92 (both down tot he spike low in October 2008).

Anyway, there may be support via the moving averages, but it looks like odds favor some sort of pullback/retracement/reversal in silver (and gold) prices.  Let’s drop to the daily chart.

Silver Daily Chart:

What got me interested in looking at this further was the breaking both of the steeply rising trendline on the daily chart as well as the Arc (red) from the Rounded Reversal (which has played itself out perhaps).

Price is above all key moving averages and is in a confirmed uptrend, so any short at this level would be counter-trend (on the daily chart but in the direction of the weekly trend), but perhaps buyers might be tempted to take well-deserved profits at these levels which could add further downside momentum.

The momentum oscillator isn’t giving us any clues, other than the black line (3/10) broke beneath the Red Line (trend line) giving a sort-of aggressive signal.

Price formed a doji at the $14.50 level prior to the reversal, and the large down day (candle) Tuesday is a sell-signal.

Let’s keep an eye on silver and gold for clues of additional downside momentum, and as to whether this retracement is a simple pullback buying opportunity… or something more ominous.

Corey Rosenbloom
Afraid to Trade.com

3 Comments

3 Responses to “Sell Signal in Silver?”

  1. stock trading software Says:

    Why do you think the time is right to sell silver when gold is going to be in short supply soon? I wonder if eventually a new standard will have to be found? Silver? Platinum? Lead lol.

    At the current way things are going the gold standard is a complete joke.

  2. Corey Rosenbloom Says:

    It’s not a long-term sell signal – it’s forecasting the probable direction of the next likely swing, which should be a retracement swing down into support. Ultimately I suspect prices will be higher, but right now it appears they’ve run up too far too fast – at least when I posted this article. Prices fell again today and we’ve hit potential support via the EMAs.

    I tend to trade the market one day at a time and one swing at a time and not make predictions too far out.

  3. Andrew Says:

    I buy on dips and sell on rises. I buy physical gold and silver from private parties at a discount and then as soon as the price bumps up a little (or even if it’s low but I bought it right) and then I dump it all at the Silver and Gold Exchange. I call them and lock in the price and send it to them. They post live prices for all forms of silver and gold right on their site so I know exactly what the payout will be. Then I take the profits, buy again, and flip it right back to them again. I make an easy 10%-20% return on my money in less than a week, regardless of market conditions. Do the math and figure out the annual rate of return! Look at the prices on their site at http://SilverAndGoldExchange.com