Silver's Correction

Source: Clive Maund 04/13/2024

Technical Analyst Clive Maund reviews current trends in the silver market to explain where he believes it is headed.

Silver has done really well in recent weeks, ascending toward "round number" resistance at $30, but that's where it "decided to call it a day" on Friday with a big ugly reversal candle forming on heavy volume — a "gravestone doji." Silver's strong rally this month has led to its being supercritically overbought on its RSI indicator for most of this month and reaching its second most overbought extreme on its MACD indicator of the past ten years.

On its 3-month chart below, we can also see that its ascent this month has taken it to the top of the uptrend channel shown, a good point to reverse to the downside with the bearish candle that appeared on Friday, strongly suggesting that this is what it will do.

As set out in the parallel gold market update, the fear factor this month associated with an impending attack on Israel by Iran — which is now happening — appears to have been blown out of proportion, with, at the time of writing, it looks like Iran is lobbing face-saving firework-like missiles at Israel, most of which are being shot down. So if this attack turns out to be a "nothing-burger" markets will heave a sigh of relief next week — and gold and silver will likely react back as the charts are suggesting.

As with gold stocks, this is thought to be a good time to take some profits on silver stocks with a view to buying back any stock sold at a better price a little later or taking the opportunity to rebalance one's portfolio to include the strongest stocks.

We are only talking about a correction here — the powerful PM sector bullmarket should soon reassert itself and take prices much higher.

How far might silver react back over the short to medium term?

It will probably be no lower than about $26.50 before it turns higher again.

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Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be only be construed as a recommendation or solicitation to buy and sell securities.