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The twenty day average and 2011 VWAP which starts where the 31.28 highs came into play was resistance. I said yesterday it was both bullish and bearish for the market to retrace lower. For it to be bullish, it needs to hold some significant area, which would be the five day average which as 4:00pm EST is $27.91 and the fibonacci from the highs of $31.28 from the start of the year as well as the lows of $26.30 last week gives us a 38.2% level of $28.20. This level was a nice area of support today and this formed a "cup and handle" in the early afternoon session. This is where the second dip is lower than the one that preceded it and the target for this pattern should bring silver to $28.50 which is where it closed on Tuesday. The market after this was support on the neckline of the cup and handle which is $28.30.
On the 15m chart the 20 day average was resistance and it pulled back a little and is showing very bullish signs as if it wants to break through and move up to the 50 day average. The trend line was broke a few days ago and the odds favor at this moment that it will be a trend reversal. Within' the battle of the 5 day/10 day versus the VWAP, 20 day, 50 day the five and ten has not been tested and the resistance has been. It is still fine on a bullish level for the market to retrace back a little more as the key will be the rising five day average and a successful support test.
The daily candle chart shows the highest of trend lines (which is different that the 15m chart) has been broken above. Even though it was a red down day candle today, that is still bullish because it made a higher high and higher low and is showing more of consolidating the recent gains. The next level on this is the 61.8% fibonacci mark from the $26.30 lows and $31.28 highs. This level is $29.38.
Not much to comment on this as its the same as it was even a week or month ago. The market has consolidated mainly between $27 and $30. Markets can correct either through price or through time and on the daily chart this has been one heck of a market correction through time. The reason why I consider this a time correction over price correction is because it has held the 38.2% level on the $25-$26 range. Yes, the move from $31.28 to $26.30 is a correction of around 15%, but thats small ball when you talk about the silver market which has bigger volatility attached within' it. I wasn't kidding when I said $100 to be likely in 2011 because of its high volatility as well as how nice the long term charts look, mixed with the fundamentals of people waking up to whats going on within' the macro economic big picture.
1st Fib test would be $27.80. That is a bullish hold. The "Must Hold" is level two Fibonacci at $27.22 and if that breaks this rally thus far would be a failed one. Those are all what ifs, if we retrace to $27.80 it "should" find support to some degree. If the market makes new highs, the Fibonacci levels increase in co-ordinance.
Take note, that the high of $28.72 is not shown on this chart. This is because this level was met at around 11:20pm EST last night and the lows were met after the USA market closed on January 27.