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Throughout this bull market, Silver has formed the same corrective pattern over and over again. Currently, Silver is repeating the same pattern but on a much larger scale. Note that Silver’s decline in 2008 and ensuing recovery are a larger fractal of preceding corrections. See the chart below.

So what now? The pattern implies that Silver will grind lower over the next four to six months, before beginning another impulsive advance. Judging from past corrections, Silver could decline to as low as $12 or $13. Note the strong lateral support at $15, as well as the long-term MA’s clustering from $14 to $15. Other than major resistance at about $20 and a bit of resistance at $25, it is clear skies ahead for Silver. We should also note the beautiful long-term cup and handle formation. The handle would be market action over the past two years. Refer to our first chart and you’ll notice that since March 2008, Silver has thrice failed at $19. Needless to say, a close above that $19-$20 resistance could be very significant and would trigger a tremendous advance close to the spike high in 1980.The technical outlook for Silver is part of the reason we are super-bullish on the silver companies. We believe these companies will be the real stars of the next several years.

I’m in the process of analyzing every silver company in the industry. I’ll select the strongest and well capitalized equity. We’ll provide the result of our research at a later time. If you have a few suggestions please feel free to submit to ace@wallstreetgrand.com

ACE

Tags: Commodities, silver

This entry was posted on Thursday, March 4th, 2010 at 6:55 am and is filed under Commodities, Contributors. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.