Bullish Silver Spread Betting Market Recovers After Fall From Highs
The first chart below is a daily candlestick chart of silver for the past 20 months.
If we study this chart it becomes immediately clear that the commodity went through a strong bull phase between June 2010 and the end of April 2011.
On 28th April last year it briefly touched $49.525, after starting off at below $19.000 at the end of June 2010.
This rapid growth was not sustainable and despite desperate attempts by the bulls to revive the upward surge we have experienced a steady decline in the price of silver since then.
Turning to the shorter-term daily chart below, we can see that 22nd and 23rd September 2011 were particularly bad days for silver. During those two days the price dropped from a high of $39.825 to a low of $29.845.
The price of silver subsequently recovered somewhat, but it has never really risen significantly above the Ichimoku Kinko Hyo cloud, which would have been an indication that the bull run was about to resume.
The current price is just above the cloud, which means that, purely from a commodities analysis point of view, we are experiencing something of a bull run. The green Chinkou Span line is also above the price of 26 periods ago, highlighting that there is some upward pressure in the market.
This view is further strengthened by the fact that the price is above the red Tenkan Sen line, as well as the blue Kijun Sen.
The Tenkan Sen has also recently broke through the Kijun Sen in an upwards direction, which further confirms a bull market, at least in the short term.
Whether this trend is sustainable remains to be seen. The price has not yet reached the recent high of $35.305 it briefly touched on 31st October 2011.
At least two consecutive closes above this level could be an indication that the previous bull run is about to resume.
Fundamental factors will, in the long run, support a continuation of the bull market in silver. As with gold, silver is seen as a store of value and, while the current uncertainty in the European and American markets continue, it seems likely that the metal will eventually resume its strong growth.
Silver Spread Betting
The chart below is a four-hourly chart of the silver spread betting market. Here we can clearly see that, over the short term, we are indeed experiencing a mini bull run; the price is well above the cloud and the green Chinkou Span line sits well above the price of 26 periods ago.
With the price above the level of $32.745 it briefly touched on 23rd January, a short-term long trade might well turn out to be profitable.
This could turn into a longer-term trade if the price should continue to the level of $35.305 discussed above.
Alternatively, should the price drop below the cloud in the chart below, we should accept that January’s bull run is over.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 26 January 2012).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
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'Bullish Silver Spread Betting Market Recovers After Fall From Highs' edited by DB, updated 26-Jan-12
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