Silver prices continue to tease
Friday, April 29, 2011 at 02:21AM
Silver Prices in Silver
silver chart 29 April 2011.JPG

Silver prices are looking rather stretched at the moment, however, when they were standing at $30.00/oz they looked a tad stretched there too and prices have moved a lot higher since then. The yawning gap between the 200dma and the current price is also cause for concern for us as we would prefer it to be a lot closer. Some sideways consolidation by silver would allow the 200dma to play catch up and pacify us a little. The technical indicators are on the ceiling, however, they were there in October 2010 when prices were around the $25.00/oz level. Yes silver is overbought big time at this juncture and a number of analysts are bailing out and advising their readers to do the same. Looking at the above chart it is difficult to disagree with them, but we are not that pessimistic about silver prices. We have been silver and gold bulls for a long time and witnessed silver vaulting one hurdle after another just when the bears where finding their voice.

As an alternative to silver we have the currencies, which are all still trying to win an Oscar for dieing in the most dramatic fashion, the number one nomination is of course the US Dollar, having fallen by more than 10% this year. The battle for '74' has flopped, so now all eyes are on the '72' level, last seen in July 2009, if it does not hold then the financial markets will become calamitous to say the least. On the other hand the technical indicators are on the floor suggesting a bounce or at least a breather is on the cards. Now sit back for moment and look at the rate at which the fall is taking place, it appears to be accelerating towards the '72' level and could well go straight through it in spectacular fashion. An ignition of some sort, or a Black Swan event as some call them, could weigh heavily on the dollar pushing it below this water mark.

USD Chart 29 April 2011.JPG

Its still a play on the currencies, the tightness of supply of silver, a possible dollar bounce, a possible silver surge taking it through the old high of $50.00/oz, etc. Picking a number beyond the $50.00/oz for silver is impossible for us as it will have entered uncharted waters and it can then go anywhere, we don't have a figure for resistance beyond the old all time high, so it could shock to the upside.

Its a tough call alright, however, the next few trading days should give us a pointer as to whether or not the fundamentals or the charts will win out.


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sk chart 28 April 2011.JPG

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Stay on your toes and have a good one.

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