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Charts from NinjaTrader and indicators from Quantum Trading

Yesterday it was gold in the spotlight, today it’s silver and whilst the move higher for the industrial metal is less dramatic, nevertheless, the bullish momentum of the last few weeks continues to hold firm, and with gold looking set to push higher this will also help drag silver along in its wake.

From a technical perspective, we are now approaching and testing a relatively minor level of weakness at $16.10 per ounce and described with the red dashed line. This is from the accumulation and distribution indicator which delivers these levels automatically, and in addition, also gives an instant visual image of their strength. The wider the line the more such a level has been tested or retested and therefore confirming its strength. This level is a relatively weak area of resistance at present, but nevertheless one which has to be breached for the metal to advance further and break free from the current congestion phase. As always, any breakout will be confirmed with volume. Above we have a low volume node between $16 per ounce and $16.50 per ounce, and any move through here should be straightforward and requiring minimum effort.

However, as we advance towards $17.25 per ounce and beyond the going gets tougher. First, we have a strong level of resistance at $17.30 per ounce and described with the red dashed line. Then comes the volume point of control at $17.70 per ounce, followed by heavier resistance still at $18.10 per ounce, and these levels must also be seen against the backdrop of heavy volume resistance as shown on the volume point of control histogram to the right of the chart. If silver can break through the $18.50 per ounce price level, a strong trend is likely to develop thereafter, but the crucial step is a break of $18.50 supported with rising volume and weak selling in any reversals. Finally, note the trend monitor on the daily chart which has reverted to bullish blue and supporting the current sentiment in this timeframe.