Broadening wedge on Silver
The dramatic silver rally we saw at the start of the week was likely thanks to a short squeeze as there was really no reason to see such heavy selling pressures in Asia on Monday morning. The market set it's week's lows at a long term bullish trend line extending from 2003. I had initially thought that this trend line was somewhere around the $13.50 level. I'm still not entirely sure whether or not it is really at $14, but the market's reaction (over 10% jump from Monday's lows to highs) suggests that it is.
As I see upside potential in the platinum market right now (see related idea), it seems about the right time to start anticipating a silver reversal. Some traders will probably try to aggressively buy a new dip towards the long-term bullish trend line, but any new fall in prices will warrant caution at the end of the month. The best would be to see silver fall again towards the $14 level and then start hesitating just before the start of 2015. Another option, that would perhaps be a bit more simple to trade, would be to wait for price to break above $17 to confirm not only the broadening wedge formation but also a breakout above the three-year bearish trend line.
As I see upside potential in the platinum market right now (see related idea), it seems about the right time to start anticipating a silver reversal. Some traders will probably try to aggressively buy a new dip towards the long-term bullish trend line, but any new fall in prices will warrant caution at the end of the month. The best would be to see silver fall again towards the $14 level and then start hesitating just before the start of 2015. Another option, that would perhaps be a bit more simple to trade, would be to wait for price to break above $17 to confirm not only the broadening wedge formation but also a breakout above the three-year bearish trend line.
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