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Dramatic Turnaround For Silver?

Friday May 18, 2012 09:51

The silver chart is currently showing some promising signs.

Below, is a 6-year chart of silver (generated at fxstreet.com):

On the chart, I have indicated two similar patterns (marked 1 to 5).This comparison suggests that silver could rise significantly over the next couple of months. This would mean that a dramatic turnaround in the price of silver is coming (it might have started already).

I have also drawn some red lines at the $10, $20, $30, and $50 level. These levels appear to have acted like key levels, where the price of silver has found support or resistance.

The interesting thing about these levels is the fact that they have a Fibonacci relationship. That is a ratio that is similar to the following Fibonacci numbers: 1, 2, 3, and 5. So, if the silver chart continues to follow this Fibonacci pattern, which is often the case, then the $50 level is a very important resistance. Also, if we go past the $50 level, then $80 could be the next significant level, since that will be the next area, if the Fibonacci ratio is to be applied. The $80 area could act as a support or a resistance.

Now, I would like to zoom-in to the last part of both patterns (about point 3 to 5 of both).

Below is a graphic which compares the current pattern on silver (from about the beginning of 2011 to present) to a 2007 pattern:

On both charts, I have suggested how the flag  patterns might be similar, by marking similar points, from 1 to 6 (and alternatively from a to f). Based on this comparison, it appears that the silver price is searching for that point 6 (or point f, which might be in already).

These patterns suggest that the current flag pattern, is important for the future of the silver price. A breakout at the resistance line of the flag could mean that we will have a significant rally, and an eventual breakout at the $50.

Warm regards,

Hubert Moolman

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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