Silver....

Could the price action on silver give hope to the gold bugs after all? Well, the downtrend channel that silver has been consistently trading in since mid-May has now been broken. Be careful though, as a broken downtrend channel does not necessarily mean a rally will be seen. It could simply be a consolidation, however the bulls will certainly be encouraged. The key near term level to look for is a close above $15.00, as this is a level that on numerous occasions in the past three weeks has been a barrier for the bulls. I have also talked on several occasions about the resistance of the falling 21 day moving average (currently $14.79) and this is also under pressure again today. The momentum indicators have suddenly start to pick up sharply (especially the Stochastics). For now this is just an unwinding rally but if there is a close above $15.00 then it could be something more. There is big overhead resistance around $15.50 and it could just be an unwinding rally that pulls back to that old floor before further downside is seen. The hourly chart shows considerable improvement in the past week and this level could be one to watch (not least of all for an indication of a possible recovery on gold)