Friday, February 18, 2011


Video created today regarding a chart for JP Morgan. Also has more info on logarithmic vs linear charts as well as a simple example on physical supply and demand.

Silver makes another gain breaking $32.00 USD fiat dollars

To enlarge an image, click on the photo

Productive day today on the market. The market managed to make it to $32.87 today before selling off. I can't show you everything on this chart as it only has times from 9:30am EST to 4:00pm EST. However at around 8:20am EST the market bottomed at $31.64 and the top was $32.87 as mentioned and shown on the chart. The difference of these two numbers is $1.23, and with this information we can calculate Fibonacci Retracement. 1.23 x 0.618 + the low of 31.64 gives us a figure of $32.40. That happens to be the level that Silver ended the day with sideways consolidation. It bounced above and below this line and this is fibonacci doing what it has done so many times in market action and thus by holding this support, it gives me reason to be optimistic going into the weekend

Two consecutive days silver has made nice gains after the sideways consolidation. As I was stating before that the more often a significant level of support/resistance is tested, then the better chances it has of taking the level out. The level here was $31.40 and sure enough it took that level out very nicely. There is no confirmation on the daily/weekly chart as of yet on the breakout, however there is confirmation on the longterm chart (quarterly line chart, not shown today) for Silver going to $50.00 and there is confirmation when you use fundamental analysis for silver going not only to $50.00, but much higher than that. The only question is when it will happen.

The weekly chart above is very strong. The selling that occurred to start the year was a simple dip on this current bull market and we had three red candles lower and four green candles higher that has now taken down the previous highs of $31.28. It has now broken this level by around 5% and would like to see it come back down to this level where it could find support, but if the market wants to keep rallying higher, that is fine with me.

When I look at this upside fibonacci chart, I get very excited as everything seems so clear to me. This shows me sellers could not get very active at the $31.40 level. Yeah, they managed to bring it down to $26.30 which on the grand scheme of things is only a small move. Silver having 15 percent up or down moves is petty change really and small ball. The break above this line has given us a decent pierce above it. Remember it has only surpassed it by five percent, and thus it is small ball to the upside. However, my eyes see this as a failure for this level to be that strong of resistance and would expect the $48.30 level (really $50.00) to be tested somewhat soon. It has a chance to test it next week (although very highly unlikely), but within' the next 4-8 weeks I would think it should make it to this direction.

On this weekends video, I am going to draw better trend lines for the week and readjust them automatically for next week. Because it surpassed the upward trend this shows me how strong the bulls were this week and how relentless they managed to get the market higher. Of course, If I am to say "THE BULLS" as in the people, it might be best to define who these people are. It's not your every day investors whom put in 40K here or even 250K there in fiat debt notes to silver. That kind of money can hardly move the market at all. It is the big financial institutions whom control the direction of the market. I would like to be a fly in the wall in that key room of JP Morgan to where they make their big decisions, but I feel a lot of this is short covering aka short squeeze rally not only this week, but over the last half year or so. I wish I knew how much they have left to cover, but the trend is higher and I look forward to what will transpire next week

1 comment:

  1. Not long ago, your call for a move towards $50 would have seemed radical, but after seeing the moves of the past two weeks I am stating to believe it could happen quickly. I think my perspective was warped after watching it move so slowly from the lows of 2008 to the start of the Aug 2010 rally.