This post is in response to a reader’s question concerning what I’m seeing in the silver and oil markets.
The first chart is a daily three line break chart showing an rising trendline support near the $92 area, which coincides with previous resistance on the daily chart below that one. I’m essentially waiting for this chart to either hit support or flash a white candle on the the 3 line break chart, along with a TRIX crossover. This downturn has been contained as the RSI remains well above the 40 level (associated with bull markets).
Silver has a brutal correction in a very short amount of time and is struggling to remain above the oversold 30 level on the RSI. If it can turn the corner before that happens I would view that as a show of strength. If it succombs to that level this correction could drag on and I would remove it from my watchlist at this time. I’ve opening stated that the $26-28 level is where I would start to get interested if we see some sort of capitulatory selling, but I also like to buy strength, so if we can turn the corner fast I would seriously start looking at silver again. That level also nicely correlates with 61.8% fibonacci retracement level on weekly below.
Bottom line…silver had it’s fun and it’s still too early to say the party is over, but don’t be that eagar to jump back on this train as all signs are pointing down at this time.
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