I was watching top metals closely as their price dynamics didn’t convince with sharp zigzags up and down, which are more appropriate during market consolidations, not trends. When silver hardly tagged the former top on the 1st of July, I got cautious. So, this post is aimed to share with you a warning alert for top metals as I spotted a Bearish signal on the silver chart. I will start with its daily chart below to show you the details.
Chart courtesy of tradingview.com
“Silver was a gamechanger” in April as then it finally revealed its structure with a sharp drop and the following V-turn, which indeed changed the game for both top metals since then. This time again, it shows a leading Bearish indicator ahead of gold.
The new high of $18.44 on the 1st of July was not confirmed with a new top on the RSI sub-chart as it, on the contrary, showed a lower, much lower peak. This shapes a well-known Bearish Divergence, which could push the silver price to the downside as the market seems to get all juice out of this move up already. Moreover, this indicator is already approaching the crucial 50 level. Let’s watch if it will break below to confirm the new correction.
The metal again missed the so-close target as it failed 50 cents ahead of it. This makes me think about the completion of the long-anticipated CD segment. But the story doesn’t end there as this move up could only be the first one, and the other one could follow after the retracement that I highlighted on the chart. Let’s don’t rush to conclusions now as we should watch closely which structure will emerge.
There are three Fibonacci retracement levels are shown on the chart. We don’t know the possible depth of an anticipated pullback. The nearest support is located at 38.2% at $15.84. The deepest retracement is located at 61.8% at $14.24.
Loading ...Let’s see where silver could push gold in the following chart.
Chart courtesy of tradingview.com
I think that everyone would spot on the RSI sub-chart at once to see if there is a Bearish Divergence either. As we can see, there is no Bearish Divergence as of yet. The reading of indicator at 61 is safe above the crucial 50 level. Shall we start to worry then?
I switched to the 4-hour time frame to check if it builds there. Check the snapshot below.
Indeed, the Bearish divergence was built on it and now plays out with a current reading at 50, right on the “fly or die” edge.
Now let’s get back to the daily chart. The price moved above the $1746 trigger as planned, it hit the new maximum of $1789, but that didn’t meet our expectations. Moreover, it slid back to the $1760 area, which is not impressive progress since the top reached in April. The price sits right on the red support, and it risks to drop below it soon.
There is no safety net until the price will drop to the earlier consolidation’s support at the $1661. This level also marks the beginning of the Fibonacci retracement area with 38.2% at $1660. The deepest level is located at $1580 at 61.8%.
The RSI should break below 50 on the daily time frame to confirm the start of a correction.
Loading ...Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
The fed poured 5 trillion into the economy inflation is hiding around the corner and The mad bull Will come charging out of the dark and it will be late to get in. Long term is a good bet
a new supply of silver just entered the market a few days ago at between 20 and 21
1, 5, 10, and 100 ounce silver bars at apmex
but otherwise the rest of the market is still sold out
Please note: gold and silver are not moved by the exact same drivers, hence divergences between them are a fairly frequent occurrence and there is no law that says one must drag the other along for the ride (even though it often does happen, dependent on contingent circumstances). There is also no limit to the gold-silver ratio, for the same reason. All we can state is that silver looks historically very cheap relative to gold, but we have no way of ascertaining whether it will not become even cheaper.
Gold Silver ratio is is around 1to 100 which can not go for ever.It would pause and hence gold has to adjust.