silver futures continue higher on the daily chart

December Silver Futures – daily chart

Following a long period of sideways consolidation throughout the summer months, silver futures finally broke out of their trading range in mid August and now look set to develop a strong bullish trend over the next few weeks. The breakout initially occurred on the 20th August with the price of silver finally closing above key resistance in the $28.30 per ounce region. This was a level clearly defined by the Hawkeye pivot on the 31st July, and to the downside a series of higher lows punctuated with further pivots gave a strong clue that the breakout, when it arrived, would be to the upside.

This was indeed the case and since then the bullish trend has continued unbroken. The initial Hawkeye roadkill signal came on the 20th August on the daily chart but was an aggressive signal as the 3 day trend was still in sideways congestion as shown by the white trend dots. However, two days later Hawkeye delivered a conservative trend signal on the 22nd August as the 3 day trend also turned bullish to confirm the positive sentiment on the daily chart. Since then the Hawkeye heatmap has remained bright green and, more importantly, the volume in both the daily and the three day chart has remained strongly positive with buyers continuing to flood into the silver market. It is also interesting to note that following the breakout this was accompanied by rising volume on the daily chart. In the last few days we have also received a confirming roadkill signal, the grey dot, which has given further evidence that the trend is now building.

Last Friday’s trading session for December silver futures saw the market close at $33.69 per ounce. The key resistance level now ahead is in the $35.50 per ounce region and if this is breached then we can expect to see silver prices surge higher in due course.

From a fundamental perspective the price of silver is also following that of gold which too has had a similar breakout, partly as a result of significant weakness in the US dollar. This weakness is likely to continue for some time particularly if the FED follows through and delivers its much vaunted QEIII programme. This is likely to have two effects for silver. First a rise in price owing to dollar weakness but secondly a rise in price due to strength in equities which are likely to benefit.

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