Silver is Still Very Broken(ne)
- Posted by Greg Harmon
- on May 4th, 2011
Silver seems to be all that anyone cares about. First it was how high can it go and then it was too high and ready to fall. Now the talk is on when the bottom will be hit. I cannot answer that but I can offer some insights from what my charts are showing.
There is a ton of bearishness in this chart. Make that a tonne (12% bigger). I can point to 7 indicators that suggest it has more downside.
1. Three Black Crows – I wrote about this earlier, a bearish candlestick continuation pattern.
2. Relative Strength Index (RSI)- Steeply falling through the mid line and still along way from being over sold.
3. Moving Average Convergence Divergence (MACD) – Crossed negative only 2 days ago and accelerating down.
4. Fibonacci levels – There is support from the Fibonacci retracements coming up but the first one does not come into play until 38.05, $1.25 lower. The better chance seem to be at the layered Fib level at 37.37/37.38.
5. Bollinger bands – It has crossed the mid point of the Bollinger bands and might find some support at the lower band at 37.28, currently.
6. Andrew’s Pitchfork – After losing the Median Line of the orange pitchfork it now is being drawn to the Lower Median Line, currently at 36.21
7. Simple Moving Averages (SMA) – The shorter SMA the 20 and 50 day, are starting to roll lower.
Still looking for your buy point? Why? The last two pullbacks in Silver were pretty sedate as you can see in the tip of the Pitchfork heads, as much a time correction as a price correction. This last move has happened in 4 days. Do you think there will not be a time element to it also? Oh, it might bounce before any of these indicators turn, stranger things have happened and it seemed to many to day that Silver found some support at the 50 day SMA. If so I expect I will get all sorts of e-mails and comments with advice for what to do with various body parts, but I will continue to sit on the sidelines and wait for a confirmed bottom before I start to consider a play.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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