Friday, May 24, 2013

SLV Silver ETF Weekly and Daily Charts Fibonacci Retracements Downward-Sloping Channel Positive Divergence

Silver and gold are very volatile these days. The SLV weekly chart shows the red downward-sloping channel in play for over two years. Price is now testing the bottom rail of the channel. The blue lines show the Fibonacci retracements for the big bull run from under 10 to 50. Price continues to test the 62% retracement area. Note the strong support at 19 so a price test to this level cannot be ruled out. Also, Keystone's 80/20 rule says 2's lead to 8's so the breach of 22 may lead to 18. The indicators on the weekly chart are all positively diverged with the exception of the MACD line that remains weak and bleak wanting to see another price low.

On the daily chart, the falling green wedge, oversold conditions and positive divergence created the juicy bounce the other day that Keystone was lucky enough to catch. The daily chart is content with SLV moving higher from here forward. The money flow and RSI profiles are starting to indicate a preference for long and strong over the last couple weeks while at the same time price remains depressed. This behavior hints at a need for price to move higher.  The small circles highlight capitulatory-type selling in SLV over the last month. Those hanging on to SLV finally threw up their arms after the gap down and gave up, another indication that SLV is placing a near-term bottom. Projection is sideways to sideways up moving forward. The 20-day MA at 22.62 and the gap down level at 23.5 are upside targets. The gap down in April creates an island. As price recovers, watch for a potential island reversal that would take price directly from 23.5 to 25+, however, sideways choppy action is likely for the days ahead. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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