Weekly Spot Silver Candle Chart - 9th March 2009

As with the spot gold analysis that I have just posted, I thought we would start this week by looking at the weekly chart for spot silver prices, rather than the daily chart, in order to provide us with a slightly longer perspective on our trading, and as you would expect the analysis is very similar to that for gold. The bearish engulfing candle of two weeks ago failed to be confirmed in last week’s price action, with the week ending with an up doji, and a deep lower shadow, indicating that the bears attempt to move the market lower was overcome by the bulls buying the market later in the week. Whilst both the 9 week and 14 week moving averages were penetrated, the close on Friday finished well above all three moving averages, and with the 9 week now crossing above the 40 week average, this adds a bullish signal to the move, suggesting that we should see prices move higher in the next few weeks. My target for the move remains the same as before, as we are still looking to penetrate the resistance level at $16.45 and it now appears that the signal of two weeks ago was false and can therefore be ignored. For longer term trades the current position provides good buying opportunities, so my suggestion is to consider entering long term trades during the week, buying into the market on any dips, a view confirmed by the COT index.

Moving to the daily analysis, spot silver prices followed gold higher on Friday and crossed above the 9 day moving average gaining 10 cents to settle at $13.34/oz. The move was influenced by a weaker US currency together with a flight to quality buying, largely triggered by stock markets resuming their decline. The release of payrolls data in the US with the monthly NFP figures, although in line with expectations, signalled that the economy is getting worse,  so it makes sense to hold silver along with gold.

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

Support:    $13.210 (Friday’s low)                                      Resistance: $14.215 (high of 17/02/09)

Support:    $12.861 (low of 05/03/09)                                   Resistance: $13.760 (high of 26/02/09)

Support:    $12.410 (low of 03/03/09)                                   Resistance: $13.528 (14 day moving average)