Silver has been performing stunningly well on the charts at present and while most traders will be content with their shorts, some are now starting to ask when it might end. Downward trends certainly don’t last forever, especially in markets as fast paced as precious metals.
Admittedly, I’m a little cautious of the downward trend extending much lower on the charts. There is a strong reason for this, as shown below in the monthly chart which I have cobbled together for your eyes.
At present we are in a strong area of liquidity and it’s likely the market will be digesting this and may look for a move higher – I’m not saying right this second but something you should be acutely aware of because trends are not permanent. Looking at this chart you might take a look at 2007-08 and say well its fallen further. No doubting that it has, as silver is used in industrial application and during the global financial crisis industrial users let their stockpiles dwindle as market demand slacked heavily.
Looking at the hourly chart, it’s very clear that at present there is a cup and handle formation on the charts. I’m not a firm believer in a cup and handle pattern, but when something like that appears it’s worth taking note. Silver does love its technical patterns after all as we have seen on the charts. It could possibly by the tipping point that people have been watching for.
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