Silver Driving Higher For the Holidays

• Posted by Greg Harmon
• on November 25th, 2014

What would the holiday season be without Silver. Silver and Gold. Silver looking like the snow and icicles hanging from trees and buildings. Gold adding to the majesty of it all. No matter what holiday you are celebrating this time of year, the Silver and Gold theme add to the excitement. Sam the Snowman (Burl Ives) has it right though when he sang “How can we measure its worth? Just by the pleasure it gives here on Earth.” That was 50 years ago this year. So it is interesting to see that the onset of the holiday season just might be a catalyst to push Silver higher.

Silver has been drifting lower ever since it peaked o $48 in early 2011. The last five months have accelerated that downturn as seen in the chart above. The steep falling trend resistance has halted all advances. But there are some early signs of a possible reversal.

The first is the move back to the trend line, not coming from a rounding top like in October, but from a move higher out of consolidation last week. The next is the MACD pushing higher and making a new 3 month high. And then there is the RSI. It is pushing through the mid line, generally a bullish signal, and making a new 5 month high.

It is not a given that Silver will continue though. Until it breaks over the trend, and the prior high at 17.50 it is a risk for a Negative RSI Reversal. This occurs where the RSI makes a new higher high but the price does not. And a reversal before a new high in price would trigger a target of a new low, in this case $2.50 below the wherever the peak ends up.

So maybe the Holidays bring a rally to Silver, and you could start a cautious position on a break of the trend. But waiting for a move over 17.50 for a full position might be wiser. At the rate it moves that could happen around Christmas…..

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