Friday, January 20, 2012

Silver, back for more?

Indices spent most of the day bouncing around near the same levels. The S&P500 and tech remained below yesterday's close, while big caps stayed above. Big caps leading is usually not a sign of strength for the overall market.
However, there was some strength/buying in the last 20 minutes of the session and we ended the day basically where we started.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Metals: just like yesterday, some divergence between them, but this time the other way around; copper down, gold about breakeven, silver up huge.
Oil: crude was behaving weak the last 2 days and today it broke down, -2%
Euro: down a bit, digesting the move from the last few days.

I'm following silver closely because of recent price action. The daily chart as well as today's intraday chart show very bullish patterns. Let's take a look at the daily chart first (below).
There's a sort of inverse head-and-shoulders pattern, with the high right at the level of the low of November. We broke that resistance today, and how! A big rip higher, with lots of buyers coming in.

On to the intraday 5m-chart. We can see silver rip higher for 5 straight hours. Several consolidation areas offered a low-risk entry. Maybe we'll see a pullback on Monday, offering a good, low-risk entry.

It's highly doubtful that we'll see a move similar to the one in 2010-2011. But with stocks being overbought, it's very well possible that silver and gold will move up some more as funds are moving from stocks to other investments/safe havens.

Some articles for tonight:
The Next Trade Setup in EURUSD
The Most Important Chart for Next Week (also watching silver/gold)
Proper Preparation (daytraders)
Highly Influenceable Traders
Cycles of Financial Crises 1810 to 2010

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