Silver forecast for the week of September 1, 2014, Technical Analysis
The silver markets as you can see tried to rally during the course of the week, but found far too much in the way of resistance at the $20.00 handle. We ended up forming a shooting star which of course is interesting, as it is a very negative sign. We believe that the shooting star signifies that the market is ready to fall and test the $19.00 handle again. This is been an area of significant support, so it will be interesting see what happens next.
With that being said, it’s almost impossible to ignore the fact that we could be trying to form a descending triangle. This would be a massive one, and what has caught our attention is that a break below the bottom of this triangle measures for a move to roughly $13.00. Why that’s important is that on the longer-term charts, that is an area where you would anticipate seeing support. Because of this, we feel that the market could very well be getting ready to break down. If it does, this could be a very ugly move as far as silver is concerned.
On the other hand, we could get a supportive candle at the $19.00 level, and that of course would have us buying as we believe the market would then turn around and head back towards the $22.00 level, or the top of the most recent consolidation area. Because of this, we feel that the market is probably one that you need to let do its thing first, at least before placing any type of longer-term trade with a significant amount of money. That being said though, if we do get the aforementioned break down, we are not only short of this market, but we are aggressively so and probably would short the market every time it bounce, based upon the fact that there is such a significant downtrend in effect. Because of this, we are going to be patient and wait for the market to tell us what to do, not the other way around.
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