Silver Not Done Rallying; Look For 8% Upside From Current Levels
Boyd Baker, analyst for Ira Epstein, a division of Linn and Associates, uses an analysis technique that his firm calls “PriceCounts”, which utilizes the theory that the initial leg of a new price trend is “all the information needed to project one or more objectives in the direction of the new trend,” according to a trading overview document by Ira Epstein.
According to Baker’s analysis, July silver futures initiated a new PriceCount when it closed above $16.865 twice this past week.
The first upside target, according to this PriceCount, is $17.437 an ounce and the second objective is $17.922.
Silver has been trading in a narrow range since January 2018 and has broken past $17 an ounce for the first time since April on Wednesday.
Baker noted that from here, upside potential remains intact as long as July futures do not trade below $16.19. The comments come as silver has struggled to hold on to its gains as gold futures fell to a six-month low Friday. July silver futures settled the week at $16.48 an ounce, down almost 5% from its highs earlier in the week.
“The $17.45 zone appears to be key resistance as this was a previous PriceCount that was already met,” he said in a report.
Baker recommends trading July silver 1,000-ounce futures (YIN19) at $16.75 or better.
“Place sell stops at $16.30. Take half profits at $17.40 and then move stops up to break even. Exit remaining positions at $17.90,” the report said.
Silver has struggled to keep up with gold for most of the year. While gold has traded range-bound the last month, silver slowly crept up, pushing the gold-silver ratio to 77 from 80, where it hovered until mid-May.
Some analysts remain long-term bullish on silver, as the electrification of cars and the emergence of renewable energy will require more of the white metal in batteries and solar panels.