Silver Setting Up To Rally (W)
Created on Saturday, 02 May 2015 01:56
Written by Austin Galt
Silver seems to be holding up quite well so therefore I am revising my short term forecast. Let’s focus on the weekly chart to show this change in outlook.
SILVER WEEKLY CHART
In the Silver Analysis April 2015 outlook, I was looking for price to come back to around US$15.70. Price reached this target a bit earlier than I expected which caused me to change my outlook down to around US$15 in the Silver Update April 2015. However, since then the silver price has held up quite well and in response to this resilience I have taken another look and am now altering my forecast for low.
In the Silver Analysis March 2015, I added both Fibonacci retracement levels and a Fibonacci Fan using the December 2014 and January 2015 as the starting and ending points. Price did a slam dunk putting in a low as outlined around support from the 76.4% retracement level and the 88.6% fan angle. That was a solid low and I now think that low will hold.
Price is now back around support from the 88.6% angle and while I think it can push a bit deeper I doubt it will get back to the 76.4% retracement level.
So where is the low likely to be?
The PSAR indicator shows the dots underneath price signifying a bullish bias. I expect price to test this support which holds and hence price turns back up. These dots are currently at US$15.47 and next week will be around US$15.53.
The low two weeks ago was at US$15.65 and I expect price to bust below that level. Therefore, I am looking for a low between US$15.53 and US$15.65.
Price looks headed to the lower Bollinger Band and it will be around US$15.60 next week so that looks spot on.
The RSI and Stochastic indicators both appear to be generally trending up from their lows so price turning back up next week would suit here.
Finally, while not shown, the monthly chart shows a negative April and while it is fine for price to take out the previous months low, taking out the previous two months lows would appear quite bearish. So, taking out the April low of US$15.65 but not the March low of US$15.27 keeps the bullish case firmly in play.
So, while I feel I was correct in altering the April analysis in forecasting further lows, I feel the April Update has overestimated how far price might fall.
Summing up, I now expect a low next week below US$15.65 but most likely above US$15.53 and certainly not below US$15.27.