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The Silver Price & Broader Markets: How Will They Trade This Week? Steve St Angelo (24/01/2019)

The Silver Price & Broader Markets: How Will They Trade This Week? Steve St Angelo (24/01/2019)
By Steve St. Angelo for SRSRoccoReport 1 years ago 3524 Views No comments

January 24, 2019

The silver price trended lower last week after hitting a high of nearly $16 the prior week. So, what’s in store for silver and the broader markets this week? If we look at the moving averages and what is taking place in the broader markets, we may find some clues. It seems as if the silver price over the past two weeks has been moving in the opposite direction of the Dow Jones Index and the broader markets.

As the Dow Jones increased 1,800 points since January 4th, the silver price fell more than 50 cents to $15.40 on the close of Friday. If we look at the Silver Daily chart versus the Dow Jones Index (Black line) we can also see that the silver price has been trading between two moving averages:

The silver price peaked right when the Dow Jones started the second stage of its correction higher on January 4th. On the close of Friday, when the Dow Jones Index added another 336 points, the silver price fell more than $0.20 to $15.40. So, it seems as if the silver price will continue to be weak as the broader markets move higher.

But, I do believe we are going to see a peak in the Dow Jones Index and broader markets very soon, likely this week. As I mentioned in a previous video update, the Dow Jones will probably hit resistance at the 12 Month moving average (MMA) of 24,875 before the end of January and will head down by the end of the month and continue the same trend lower in February:

So, if I am correct that the broader markets will begin to sell off, then the gold and silver prices will start moving back higher. Of course, there are no 100% guarantees with technical analysis, but we can check the markets and see how the price actions traded over the next two weeks.

Now, the Silver Daily chart suggests there is a good support level at $15.33 (25 DMA-Blue line):

However, the silver price could fall below that $15.33 level to $14.85 (50 DMA-Red line) before reversing when the broader markets peak and decline sometime in the next week or so. Because the broader markets are becoming extremely overbought and now a high risk, shown in the Sentiment Trader Report I receive daily, a reversal lower is soon to take place:

When the broader markets begin to sell off once again, in what I believe is an ongoing BEAR MARKET (unless Central Banks step in with trillions of new QE), the precious metals prices will continue to disconnect and move higher. Thus, I believe silver will show a reversal sometime this week or next week at the latest and start moving higher to the $16.40 range shown in the monthly chart below:

Interestingly, the silver price in the monthly chart is right up against the 12 Month moving average (12 MMA –Brown line). In December the silver price went right up to it (large white candlestick) and is attempting to push above it.

If my analysis is correct, then I do believe the silver price will push above the 12 MMA by the end of January and then start trading above it in February as it continues up to the convergence of the three moving averages (25, 50 & 200 MMA), at the $16.40 range.

Lastly, due to the Federal Government shut down, we haven’t had an update of the COT Report for a month now. So, we have no idea the level of Commercial Short positions. However, I do believe the Commercials liquidated some short positions as the silver price has fallen over the past two weeks. If we look at the Sentiment Trader Silver Optix, or sentiment chart, we can see that sentiment is still heading lower, but will probably bottom soon and move back higher with the price.

Independent researcher Steve St. Angelo (SRSrocco) started to invest in precious metals in 2002. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.

You can find many of Steve’s articles on many noteworthy sites. Visit Steve at https://srsroccoreport.com.

The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.You may copy, link to or quote from the above for your use only, provided that proper attribution to the source and author is given and you do not modify the content. Click Here to read our Article Syndication Policy.

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