Monday, April 25, 2011

Silver - Look Out Below?

Overnight the silver continuous futures contract (/SI) made it up to $49.82 following a sizable bullish gap opening to begin last evening's session. Since attaining this overnight high silver retreated and having found support at $47.85, is trying to make a comeback - at this writing trading around $48.05.
On the left side of this chart is the 60 minute look at the situation and the right side of the chart is the daily view.
Click on the chart to ENLARGE
The charts raise more questions in my mind than answers, unfortunately.  Such as, will the daily candle turn into a red reversal candle later today? Have the trend line breaks and negative divergence sell signals on the True Strength Index (TSI) correctly foretold the future? If silver does continue to retreat further will support at $46 hold?


  1. John,
    Thank you for these charts so early in the morning. You're the best. Most of us don't know what to make of this. A pullback would be healthy at this point, wouldn't it? All the questions you posited are the same questions I'm asking myself. We'll have to watch this day play out, and hope we get some answers. I hope we'll see something from you tomorrow once the signs are clearer. Let me say once again how much I appreciate and look forward to your analysis.

  2. Holding at 46, looks like a minor case of profit taking to me.
    Thanks for all the work John!

  3. Hi John,

    Below on next blog you state that the US dollar should be losing around .24 cents perday as this will be the final C leg down for it, and the up leg for gold. Im wondering, couldnt silver just slightly correct and head up for one final thrust if this was to occur?

  4. Hi John,

    Silver is at a “top limit” but when is the question?

    Recently, ZSL is having very large or heavy volume.
    Question: Is this a possible selling climax in the ZSL?

  5. Hi John

    I've literally just discovered your website and over the weekend studied EVERYTHING you've written on it! I'm really, really impressed. I loved your work on parabolic tops and 200dma % figures. Extremely well reseached. All makes fantastic sense. I shall be monitoring your pages from now on. During this parabolic move, it looks like the perfect opportunity to use your TSI indicator the way you do.

  6. Conheart - thank you. It feels nice to be appreciated.

    Beto - you could be right. I don't know.

    ILUVPMS - if the past C-waves are any indication, silver will not put in it final top until the same day that gold does. As I don't expect gold to be doing that any day soon, there is definitely lots more time on the shot clock for silver. The question is does it take a breather and shoot right past $50, or does it get knocked even harder than today and over time regain its footing and finish just above $50 when gold finishes? (2006 example)

    Anon 1 - yeah, wow - look at today's volume in ZSL. Even the weekly volume looks frightening.

    Anon 2 - Greg, thanks for joining us and for taking the time to do all that reading. I am certain a number of people have benefited greatly from taking the time to understand how the True Strength Index works - and that is motivation for me to continue.

  7. Hi John,

    I do think it´s time now to think about the ZSL. You have to wait for a new pullback to the north close to $46.00 (LondonFix) and jump in for the next 10 days.

  8. Your work on parabolic moves suggests that we are within 10 to 20 trading days of a final top in the silver price. Is this the beginning? Is this a TSI sell signal based on the same criteria identified in your earlier pieces on the 2004/2006/2008 parabolic moves? This is great stuff, can't find anything like it anywhere else on the net!

  9. Mickette -- In the current market condition, I would not care to buy and hold ZSL - though I imagine after this C wave tops silver will retrace its steps back down to a major support area (this summer)and if that consolidation area turns out to be below current $45-46, ZSL would be an OK hold. The other way to play ZSL would be to keep a fast finger on the trigger. But once this bull resumes I fear one would get bucked off pretty quick if they tried to hold their short and intend for it to be a quick profitable trade.

    Andrew -- I have not gone looking around the Internet for someone with a blog exactly like mine, but I am told it is unique. And I like that. Thank you for the affirmation!

    Silver is well past the beginning of its parabolic move. Just look at a daily chart from across the room and tell me what you see. I think we are at least 20 trading days from the final top in silver. If history plays a role, silver will top on the same day as gold. And I seriously don't think gold is anywhere near done.

    If you get a chance, take a peek at a chart of the 2006 silver parabolic. You will see that it started moving in parabolic fashion - getting way ahead of gold - and then got slammed for 3 days. After that it gradually worked its way higher to make a new high in sync with gold's final and best high. I've said for several weeks now that my hunch was our current situation would turn out as in 2006. So far it has. But I have no idea if it really will turn out as 2006. My darned crystal ball is broken again.

  10. "My darned crystal ball is broken again"
    Awesome John. Great job on keeping us in the game and sane!