while i agree there will be a further selling off of silver, the chart does not show the Relative Strength Index (RSI) for silver which is currently 31.95, a rather bullish indicator that silver is currently very oversold. With RSI in mind, the expected further overselling in the near term will only make the rebound stronger.
RSI of 32 is weak, but nothing close to indicating extreme oversold which would be below 20. Also, weakness begets weakness, so weak relative strength is merely indicative of a very poor performance.
However, should this weakness progress and silver breaks support, a quick drop to 14-15 would be easily achievable and the subsequent bounce back to 19 (25%), would certainly be strong, even it were to leave everyone who bought it in the last 5 years underwater. It is also not unusual and actually is expected, for popping bubbles to retrace 70% or more.
Look at silver's monthly macd. It's the most oversold of any time in the past 18 years. My chart only goes back that far so it could be a lot longer than that. Macd is currently showing a small positive monthly cross. The last time one of those occurred was in the summer of 2009. The USD has the highest seen weekly RSI in >4 yrs. Lots of extremes in play. How about the USD/JPY currency cross that has been driving the PM/commodity bear and stock bull since spring of 2011. The monthly USD/JPY macd is now at levels not seen since 1997-1998. And before that you'd have to go back into the 1980's to find similarly high macd's.
The author's triangle does typically break in the direction of the current trend about 2/3 of the time. That still leaves the "other" 1/3 as a possibility. There are few sure things in chart patterns. I'd have that author look at silver's and gold's monthly macd and ask him why one should expect those to get even more oversold. With monthly macd below the levels of 2001, one would therefore have to assume gold is headed back to <$252 and silver to <$3.50.
The 8.6 year business/confidence cycle peaks in September 2015. From that time into 2021-2023 sets up very well to support another very strong gold bull run.....in "theory" of course. The cycle shift in late 2015 will tend to put the brakes on those assets that thrived from 2011-2015. It will be a changing of the guard.
Look at silver's monthly macd. It's the most oversold of any time in the past 18 years
That means absolutely nothing because from 1984 to 2004 the price never moved. However, for whats its worth, the current level of the MACD is -2.22 and flat after bouncing a tiny little bit.
My charts go back to 1980 and show the weekly MACD bottoming around -4.5. Remember, weakness begets weakness. After the drop from $50 to $5 in 1982, the price did bounce to $15, only to bleed back to $5 in 1986. Eight years later the price had dropped another 30%.
With monthly macd below the levels of 2001, one would therefore have to assume gold is headed back to <$252 and silver to <$3.50
If thats what you believe then you really need to look at a few more charts. Here's a clue...when the monthly MACD for silver dropped to -4.5 in 1982, the MACD bounced back to -1 in 1987, yet the price was the same. And when the price dropped another 30% by 1993, the MACD was at -0.5.
What does MACD mean? Moving Average Convergence Divergence. All it is a plot of the difference between 2 moving averages. As the rate of decline decreases, the moving averages will converge thus increasing the value of the MACD, however price could still be falling (just a slower rate).
How about the USD/JPY currency cross that has been driving the PM/commodity bear and stock bull since spring of 2011.
How about it? I think the yen could be just at the beginning of secular bear market that could run 10-20 years. Why has the yen been so strong in the first place. Japan has bettter fundamentals than the USA? Just as weakness begets weakness, strength begets strength. That strong MACD tells me this run has a lot longer to go.
cohodk
Posts: 19,018 ✭✭✭✭✭
Comments
"Who needs risk management when you’ve got guaranteed bailouts? - Jesse Felder
However, should this weakness progress and silver breaks support, a quick drop to 14-15 would be easily achievable and the subsequent bounce back to 19 (25%), would certainly be strong, even it were to leave everyone who bought it in the last 5 years underwater. It is also not unusual and actually is expected, for popping bubbles to retrace 70% or more.
Knowledge is the enemy of fear
Beacuse of another Democratic office holder is going to be the case? ( I ask that with a heavy heart, not an enthused one) Why that timeframe?
The author's triangle does typically break in the direction of the current trend about 2/3 of the time. That still leaves the "other" 1/3 as a possibility. There are few sure things in chart patterns. I'd have that author look at silver's and gold's monthly macd and ask him why one should expect those to get even more oversold. With monthly macd below the levels of 2001, one would therefore have to assume gold is headed back to <$252 and silver to <$3.50.
The 8.6 year business/confidence cycle peaks in September 2015. From that time into 2021-2023 sets up very well to support another very strong gold bull run.....in "theory" of course. The cycle shift in late 2015 will tend to put the brakes on those assets that thrived from 2011-2015. It will be a changing of the guard.
That means absolutely nothing because from 1984 to 2004 the price never moved. However, for whats its worth, the current level of the MACD is -2.22 and flat after bouncing a tiny little bit.
My charts go back to 1980 and show the weekly MACD bottoming around -4.5. Remember, weakness begets weakness. After the drop from $50 to $5 in 1982, the price did bounce to $15, only to bleed back to $5 in 1986. Eight years later the price had dropped another 30%.
With monthly macd below the levels of 2001, one would therefore have to assume gold is headed back to <$252 and silver to <$3.50
If thats what you believe then you really need to look at a few more charts. Here's a clue...when the monthly MACD for silver dropped to -4.5 in 1982, the MACD bounced back to -1 in 1987, yet the price was the same. And when the price dropped another 30% by 1993, the MACD was at -0.5.
What does MACD mean? Moving Average Convergence Divergence. All it is a plot of the difference between 2 moving averages. As the rate of decline decreases, the moving averages will converge thus increasing the value of the MACD, however price could still be falling (just a slower rate).
Knowledge is the enemy of fear
How about it? I think the yen could be just at the beginning of secular bear market that could run 10-20 years. Why has the yen been so strong in the first place. Japan has bettter fundamentals than the USA? Just as weakness begets weakness, strength begets strength. That strong MACD tells me this run has a lot longer to go.
Knowledge is the enemy of fear
rambu(o)s