Wednesday, January 5, 2011

01.05.2011 More Selling below the 20 day average

Silver down below $29.00 earlier today and it closed around The 29.33 area which was the top in November and the bottom yesterday. This has made the twenty day moving average start to decline. This tells me one of two things to look for. The first is a move from this area to roll over to the 50 day average and maybe towards the 200. Or this break below the 20 day average and the 29 area to be that of a bear trap. Often times bear traps are followed with a fast move in the other direction. That would be higher towards the $32 level. I have the price memory on the blog today and it's showing how big this level is currently at right now. It's the been the biggest of all of them during this bull market. Thats why the odds we have some sort of bounce from here would be pretty decent. This is both bullish and bearish to have a bounce to the $30.00. However it would be bearish if it would roll over from $30.00. It would be bullish if it breaks through $30 or consolidates the gains for further upside movement.

Fibonacci Retracement
LOW (Today) $28.58
HIGH (Yesterday) $31.28

38.2% on the way up = $29.61
61.8% on the way up = $30.25
This means that the gain to $29.40 as of this posting could very easily have another leg higher of 20 cents to this point. If it does not make it $29.60 and starts to roll over then this could be a weak sign which could make the market have another wave lower.

December LOWS $28.00
Current HIGH $31.28
38.2% on the way down = $30.03. This level was voilated yesterday.
61.8% on the way down = $29.25. We went through this level for over two hours. It has regained this mark barely as of now. Therefore a failed move is guaranteed. The failed move is either the break below earlier on the down side or the entire December rally will be a failed move that would indicated reason for the $25-$26 test.

Breakout Lows $17.74 (Aug24)
Current Highs $31.28

38.2% is $26.11 on a Linear level and $25.17 on an exponential level. If anything nature and math bugs are the ones that concerns with the exponential level and day traders and non math bugs would use linear because it is easier. The Linear 38.2% worked better on this last time. When Silver topped $29.33 and retraced lower the linear level was $24.90 and it found support on this mark rather than the one lower. Therefore holding above $26.00 keeps us bullish and with the 23.6% mark in the area of $27.50 we remain super bullish here. The Linear 23.6% is $28.08 and the exponential level is $27.35. What this tells me, is if there is another leg lower then the price target is at $28.00 as this level also meets up with December support.

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