Once we broke support a few months ago in the metals market, I began pointing to much lower levels b...
Is Silver’s Next Rally Starting?
07/14/2011 8:00 am EST
After a move higher above the 50-day moving average, silver ETF SLV has found potential footing for a push higher—and possibly even a re-test of the all-time highs made in April.
Shares of iShares Silver Trust (SLV) has been trading in a tight sideways band since its steep, one-week selloff back in early May.
SLV has a rising trend support line with initial lows at $33.32 and most recent lows at $33.00. SLV also has a declining trend line resistance with rally highs at $37.60 and then the most recent rally high at $35.75.
This creates a pennant pattern for SLV, and a breakout yesterday above the 50-day moving average (MA). If that moving average now acts as support, we could be headed higher for a while, perhaps even up to the all-time high reached in late April.
Typically, pennant patterns break in the direction of the previous trend. In this case, that trend was to the upside.
Gold bullion is again nearing its highs and a potential breakout. SLV could follow to the upside, but we recognize that this is a risky trade and sell stops must be used.
Support is currently at $33.00.
By Frank Kollar of FibTimer.com
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