Hi Ho Silver!
Silver has created an interesting chart these past few weeks. With that, I’m going to dive into three characteristics and reasons why I find silver so interesting.
First up is momentum, the spot-price of silver has created a positive divergence with its relative strength indicator. With each new low, or test of the previous low, the RSI has not followed suit in dropping like a rock, indicating the depreciation in the price of silver may be on its last gasp.
Second, we have volume. I’ve drawn a trendline on the volume panel to show how volume has fallen off since it hit $26/oz. However, as the On Balance Volume (OBV) indicator shows us, the share volume on down days is still outpacing share volume on up days (which causes OBV to fall), indicating negative volume pressure when it comes to this shiny metal.
Finally, we have a defined support level of $26/oz. which we hit in September and December of last year and most recently in June of this year. This support level will need to hold for any chance of a rally in silver.
There you have it. Silver very well could break through $26, which would likely see a pop in heavy selling volume as this support level is no secret to many traders. However, with momentum not mirroring price action, I’ll be watching to see any signs of buying volume picking up.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+.