The trade in silver is manifesting; I speculated on a target at $22. As of now, that target is still in view, but longs need the price to break out above the descending top trendline first.
Below is an updated chart of the one I showed on Tuesday, on a 2-hour timeframe.
Note how Stochastic RSI is oversold while the price looks to be supported at the midway point of the range (a retest?). Longs want to see that pattern develop as the price makes a higher high (which could be a breakout or at least a test of the descending trendline), as momentum turns back up. On the flip side, momentum topping out and/or turning down prior to price printing a higher high would be a red flag on this trade, in my opinion.
A refresher on the broader view in gold: I have written that I thought the $1832ish spot level is important. The level is providing support once again after yesterday's rally to $1845. I wrote last week, "a weekly close above $1,855 spot – that would be a very high probability indicator that the upward trend has resumed, in my opinion."
I would revise that level to $1865 - the 50-day moving average, which I think would correspond to roughly the $22 level in silver (perhaps $22.50?). The below shows gold reaching up for overbought on the daily time frame. In my opinion, it stands to reason that a visit to $1865 will occur before momentum sputters.
Thanks and good luck.
