What’s inside:
- Silver trading above resistance and clearly out of triangle formation
- US dollar break to offer tailwind
- Long-term trend-lines back to early 2015 and 2013 coming into focus
A few weeks back we began discussing silver prices and its potential paths
if it could break free from the contracting price action unfolding.
Indeed, we saw a breakout to the upside. This was not the preferred
direction from an execution standpoint given it was against the
prevailing downward trend. Counter trend triangle breakouts can be
tougher to execute than the continuation variety. That is exactly what
we have seen thus far – a difficult trade.
Once silver initially broke higher in late January it
failed to capture the $14.40/50 area which had acted as key support and
resistance since the middle of last year. Once failing at resistance
silver then retested the triangle and held. Since then it has managed to
find its way firmly above not only the all-important resistance, but to
the highest levels since November.
Gold has held a firmer backdrop since late November/early December, with the coupling of both price and futures market positioning offering support. Bottom line, it has been the preferred long. That could be changing now as the landscape for silver changes as well.
The dollar took a nasty spill yesterday, the worst
since March of last year. Given its break is coming from elevated levels
near recent highs, there is good reason to believe it could be the
‘kick-off’ to something much larger. If this is the case then precious
metals will receive a positive tailwind from dollar weakness.
The next area of contention for silver comes in the
$15.10/25 area. In there lies a pair of trend-lines, depending on how
they are drawn, extending back to January of 2015 and 2013. These
coincide well with the roughly $1 measured move target the height of the
triangle projects. Above there and we can start thinking above the $16
mark and possibly higher as the big picture will be turning increasingly
bullish.
Silver Daily: July ’15 – Present
