Silver Trading Chart 1 Sep 2009

Silver Trading Chart 1 Sep 2009

An interesting day for silver trading once again as the new week started in positive fashion, with a wide spread up bar, which closed above all three moving averages, and brushed aside the resistance in place at the 14.55 price level. It is interesting to note that gold and silver, whilst trading within the same pennant formation, ended the trading day with very different results, with gold prices ended the day lower, whilst silver traded strongly higher, a disconnect that we have noted before on several occasions. This apparent breakdown in the traditional correlation can partially be attributed to silver’s classification as an industrial metal, whilst gold is of course classified as a precious metal, and therefore silver is more likely to be influenced by the fundamentals in the equity markets, whilst gold is more sensitive to risk and investor sentiment towards the US dollar. The commonality between the two commodities however, is that they are both currently trading in a pennant formation on the daily chart, and until this pattern is broken, it is unlikely that we will see any new trend established. Any breakout, when it occurs, will be violent, as the longer and tighter the consolidation, then the greater the associated momentum of the eventual breakout. As with gold, the current support seems to be coming from the 9 day and 14 day moving averages, suggesting that when it does arrive it will be to the upside.

Support: 14.03     Resistance: 14.97

Support: 13.46     Resistance: 13.98

Support: 13.11     Resistance: 13.33