Silver chart - daily candle chart spot silver 14th april 2009

Yesterday’s trading in the silver market, provided us with a wide spread up bar, which closed above the 9 day moving average, and marginally below the 14 day moving average, and providing a very welcome boost to silver prices following the downward trend of the last two weeks.  In addition the closing price managed to break into the strong resistance immediately above closing firmly into this region which again provides us with a positive sign that this is perhaps more than just a short term blip, and the significance of this cannot be underestimated.  However, we must bear in mind that yesterday’s trading volumes were relatively thin with many European markets closed for the Easter break, and therefore any analysis based on yesterday’s price action must take this into account.

The key for silver prices this week, as for the price of gold, will be the earning season in US equities which gets into full swing later today, and indeed this was perceived as the main driver behind yesterday’s rally in the price of spot silver, with a fall in stock markets, weakening US dollar, and increasing concerns regarding the longer viability of General Motors, which now seems doomed and due to file for bankruptcy in early June.  All these factors combined to help lift the price of silver, and should this pattern continue during the week then we could see a move higher once the currency congestion has been cleared, possibly to retest the $13.76 region once again.   In percentage terms, on the day, silver prices have outperformed gold, which is often the way in any bullish rally, and in addition received a boost from a rally in copper which is perceived as a good indicator for industrial metals performance.   In addition any sign of economic recovery in emerging markets is also likely to push silver prices higher.

My suggestion for trading today is to trade with extreme caution given the above framework, and only to trade on an intraday basis for the next few days.  Today I would look for small long positions using the shorter timeframe charts and to buy on any hammer signals, or long legged doji candles, with an exit on a shooting star, or bearing engulfing pattern.  As always trade with tight stop losses moving these up to lock in any profits.

The short term trend is bearish while medium and long term trends are bullish.

Support:    $12.506 (9 day moving average)                              Resistance: $13.100 (high of 02/04/09)

Support:    $12.320 (yesterday’s low)                                   Resistance: $13.010 (high of 03/04/09)

Support:    $12.169 (low of 08/04/09)                                   Resistance: $12.877 (yesterday’s high)