Silver commentary and Technical analysis – Part 2

Video transcript

 

Spot Silver Technical analysis – Resistance levels

 (00:01):

All right, let's continue here with a Silver spot price chart.

We're still on the weekly timeframe and what I'm noticing - let me show you, I'll draw it out on the chart so we're all on the same page.

Once Silver spot price manages to break through this resistance level, assuming that it is headed higher and not going to roll over for some reason, we're likely to see a pretty fast move up to $18.70.

It’s possible that price runs into some resistance around $16.80 and has to do some work before pushing higher.

(01:15):

The gap between $16.80 and $18.70, I'd call that a whole lot of nothing as far as resistance is concerned.

Up around $18.50 or so price will test that resistance level.

I want to make this point: Once we get through this current resistance zone around $15.50 to $16.00, Silver has a fairly clear shot at $18.50.

 

Silver spot price vs Silver futures price

The next thing we’ll look at is a phenomenon that is going on in both Silver and Gold.

On the left side of this screen, we're looking at a Silver futures chart.

And so we can see that on Friday that the Silver futures price closed at $15.78.

On the left side of the screen we have the Silver spot price chart.

On Friday Silver closed at about $15.45.

(02:30):

That 32 cent delta between Silver spot price and Silver futures price is not something I’m used to seeing.

It's only been in recent months where that has been occurring.

 

Shortage of physical Precious metals

That price delta is evidence of or suggestive of a shortage of physical Silver metal.

One of the things that analysts are saying currently is that it's not really a shortage of physical metal, it's just that the physical metal is not in the right place at the right time.

I’m not sure that I really buy that.

My BS-detector goes off at that idea, but who knows what the truth is today, or any day for that matter.

The point is that like Gold, Silver has the same delta between the futures price and the spot price.

This is a Gold futures chart on the left and price is $1713.

Gold spot price on the right is $1701.

So a $12 delta in Gold pricing.

(03:56):

That's all I'm going to say about that topic today.

 

Silver spot price chart – daily time frame

This is the daily spot Silver chart.

My intent is not only to look at the charts but to also provide a Technical analysis example for people who are on the learning curve.

Perhaps I can provide some assistance.

So let's keep this long-term Support and resistance line on our chart.

For whatever reason, price seems to be respecting that line as a Support and resistance zone so we'll leave it on our chart until that is no longer the case.

(05:04):

Here on the daily spot Silver chart we want to look at a 50-day and a 200-day Moving average.

The only reason we picked those numbers is because those are the numbers that everybody else is looking at.

And so a self-fulfilling prophecy, if nothing else, price is likely to respond at these levels just because everybody has them drawn on their charts.

Therefore we want to have them drawn on our charts.

There is some interesting price action here.

We can see that we got a big strong price bar here on Thursday.

Price surged up through the 50-day Moving average.

This chart pattern we’ve drawn, this downward wedge - price poked up through it’s top and closed right at that Trend line.

How you draw your Trend lines is a very subjective thing.

What I'm doing now, if you notice, I'm trying to catch the very top of these two price points.

 

Summary of Support and resistance in Silver price

  • Spot Silver price is pushing into a Resistance zone
  • The delta between Silver spot price and Silver futures price suggests a shortage of physical metal
  • The Silver spot price chart is showing signs of strength

 

Continued in part 3…