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Bullish Reversal in Silver Occurring Now

Bullish Reversal in Silver Occuring Now

Published by Charleston Voice, 05.16.12

Yep. This is it.....finally. The Daily RSI has NEVER touched this level in at least the last two years. Right now the price is sitting at a support line. We could still get a spike down to test it, but the overall greater damage is concluded. The all-time Weekly RSI (at least as far back as 2002) low came back in 2008 at 29.1993 while right now we're perched at 33.4438.

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Silver price will likely drop

Silver price will likely drop another $3, my target is in the area of $24.25. A correction of this time frame, you would expect to see weekly and Daily RSI bottom BEFORE price bottoms, just as it did in late 2008. Shorter time corrections (few months) you would expect to see DAILY RSI bottom before price bottoms.

In 2008 Weekly RSI hit its bottom the first week of Sept, price hit bottom the last week of Oct.

"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

Fed Minutes

Yesterday the Washington Post reported that minutes from a Fed meeting held last month indicate the Fed may provide further support if the economy worsens.

I’m not an investment specialist, but I did notice that silver and gold prices rose today. Does this information change your opinion on how low the current correction will take us?

Moved reply.

See reply below.

What you're talking about is

What you're talking about is fundamental analysis, this post was about technical analysis...

So let's look at the past technically and fundamentally.

Technically 2008: Aug 14-DAILY RSI hit a low of 17.85 with PRICE hitting a low of $12.15.
This was the RSI bottom, but not the PRICE bottom, from there PRICE trended up with RSI following it up. PRICE went to $14 then again headed down.
________________Sept 10-PRICE hits low of $10.25 DAILY RSI hits low THE DAY BEFORE at 19.91. Notice PRICE carried ~$2 lower than previous low but RSI did not follow it to a lower low. PRICE then rallied back up to $13.78 with RSI following it up.
________________Oct 27-PRICE has fallen from its previous Sept 10 high to its final low of $8.45. During this drop of $5.33 DAILY RSI never dropped below 30. DAILY RSI hit its low for THIS DECLINE on Oct 16 at 34.19 and did not follow PRICE to its final low. DAILY RSI bottomed 2 1/2 months before PRICE bottomed. WEEKLY RSI bottomed 1 1/2 months before PRICE bottomed.

This is typical action of RSI-PRICE. If a rally/correction is a couple of weeks in length you would see this divergence on hourly or 4 hour charts. If it is a couple months you would likely see it on 4 hour or daily charts. If it was a few days you would see it on 15 minute or hourly charts. Ect, act...

Currently WEEKLY RSI is pointing down and at its lowest point since the correction began. DAILY RSI has hit a low of 14.82, its lowest point since the correction began, and turned up sharply. This is the FIRST sign of APPROACHING a bottom. But it is EXTREMELY unlikely that a 1 year+ correction will end without DAILY RSI first showing a 2 step divergence with PRICE, much less without WEEKLY RSI showing a 1 step divergence. We should expect to see: 1) PRICE make a lower low and DAILY RSI making a low, 2) PRICE rallying with DAILY RSI following, 3) PRICE making a lower low with DAILY RSI making a higher low, 4) Repeat 2) and 3) one more time. ( I think we are currently between 2) and 3))

Fundamental 2008: The idea that you express about the FED providing support, therefore boosting the PRICE of Silver, is founded in that if the FED prints, the dollar goes down thereby pushing Silver PRICE up. While I do agree that traders take their cue from the Dollar, it is NOT the Dollar that determines PRICE of Silver. It is traders in the Silver market and traders alone that determine PRICE. In 2008 Silver PRICE bottomed at $8.45, the Dollar index also made a HIGH that same day at 87.71. The Dollar then declined and Silver rallied. This was followed by Dollar making new higher high on Nov 20 at 88.46. But Silver did not make a lower low. The Dollar then dropped sharply to 77.69, followed by a sharp rally to 89.62, a higher high. But Silver PRICE did not follow those moves to lower lows. In fact even as the Dollar rallied from 77.69 to 89.62, Silver PRICE FOLLOWED through most of that move. The conventional wisdom is that the Dollar pushes Silver PRICE down when in strengthens and raises Silver PRICE when it declines. This is not true, TRADERS and TRADERS ALONE determine Silver PRICE. The Dollar is only an influence on Traders emotions on whether to buy or sell. The Dollar only effects PRICE INDIRECTLY by effecting emotions, and that effect is not always there.

No, it does not change my opinion on how low the current correction will go.

PS, that WEEKLY RSI did not diverge at the 2011 high, and that DAILY RSI diverged only 1 day before the 2011 high, STRONGLY suggest that 2011 was not the end of the Silver bull market. But I also note that DAILY RSI did indeed diverge several weeks before the 2011 high, if SIMPLE RSI is used instead of EXPONENTIAL RSI.

"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

Good Post

appreciate it...

Thanks TxRedneck

Thanks TxRedneck. It's obvious you spent some time writing your response. I appreciate it.

You’re right … my view was based on a fundamental analysis. You’ve given me plenty to chew on concerning your technical analysis of silver prices.

Thanks again.


That's not what it means at all. Too much damage has been done for it to "go through the roof". Silver still trades like a commodity, and the global slowdown has been ravaging ALL commodities right now.

If you are planning to hold physical for more than a couple years, then now would be a good time to buy. Don't be expecting the huge moves like silver experienced in 2010-11. Unless we go into a severe depression, silver should be higher a year from now than it is currently, but it is not a "get rich quick" play.

you are not watching the

you are not watching the COT's..

Regular supply demand forces don't apply

with the silver market. It is paper silver trading that is driving down the price, there is no silver actually changing hands. This same manipulation was done to gold in the past until the physical demand just took over. There is very little physical silver left in the world that is available for use.

If JP Morgan can no longer get free money from the FED that might change every thing. Ron Paul mentioned this in his May 14 Texas straight talk. It seems that every bank that has tried to manipulate the silver market has eventually went bust. Bear Stearns was the last victim, JP Morgan maybe next with their $2 billion lose in the past 6 weeks. There could be loses up to $18 billion in the near future.

It doesn't look like JP Morgan is in trouble financially now, but things can change quickly when your heavily invested in the derivative markets. After all it only took less than $1 trillion to bring down AIG in 2008. When there is over $250 Trillion invested in the derivatives by America's 7 largest banks any thing can happen.

I will gladly hold my silver and buy more soon, I only hope silver gets pounded down to $1 per oz so I can really stock up. The fiat dollar is going down, I want to hold silver when that happens.

Gold standard: because man can not be trusted to control his greed

Meanwhile the MSM continues..

..to tell us "All is Well"!...New Silver Coins Minted! Buy Now!
(unfortunately it's retail price)

Gotta remember to check here daily also:
The REAL story: Paper vs Tangible assets.

"Beyond the blackened skyline, beyond the smoky rain, dreams never turned to ashes up until.........
...Everything CHANGED !!

What if we do go into a severe depression?

Or if the US dollar takes a major hit to it's global reserve currency status within the next 12-24 months?

What will silver (and gold) do then?

Our family's journey from the Rocket City to the Redoubt: www.suburbiatosimplicity.com

It is really hard to predict any thing

with all the Manipulation of the silver market. The main thing I remember always is there is a real physical shortage of silver. As with any thing that gets depressed to long when the manipulation stops the price often over shoots its true value for awhile. Silvers true value is over $500 an oz. I think silver will hit $1500 in the near future. But it could also be that the fiat currency value has gone to near zero, and you wont be able to buy silver with any amount of cash.
Watch this for more answers: http://www.youtube.com/watch?v=ArpsEb4YWm0

I think we are very close to the tip point where our financial system crashes. In 1930 when the depression hit there was $280 of debt to $1 of GDP, today it is 380 to 1. In a depression you have to remember that no one has money only the banks are holding it. So people that are holding silver will have a great advantage. It wont matter at that time what fiat currency value is on silver. The real value will be what can you exchange it for. Will a few oz of silver buy an acre of land?

Here is an excellent article on silver:

Gold standard: because man can not be trusted to control his greed