Silver's Short-Term Charts Indicate Long-Term Bull Trend Moves

For most of 2019, the emerging trends in the precious metals space have been undeniably strong...

by Richard Cox via Platinum Guild

For most of 2019, the emerging trends in the precious metals space have been undeniably strong. Manyanalysist (possibly a majority of the financial analyst community) seemed to think that these types ofevents were impossible, given the fact that the S&P 500 was on a clear course to continue posting recordhighs.

However, when this type of enthusiasm in equities reaches an extreme, it's often a good idea to startlooking at the precious metals space as a protective buffer against the growing potential for downsidevolatility. This was the basis for many of my bullish commentaries (and actual trades) during theseperiods and recent price moves have largely confirmed the accuracy of those forecasts.If we take a long-term view of the SILVER/USD chart history (weekly), we can see that the initial surge inprice activity became apparent during the May-June trading period. The first major signal that theparadigm had shifted developed once prices forcefully broke through the Ichimoku Cloud structure. Priorto this event, the most significant price lows formed toward the end of May (just below $14.30) andSILVER/USD soon rallied by more than 37.5% to reach new highs of $19.65 in roughly five weeks.

For some investors (particularly those focusing on cryptocurrencies), these rallies might not seem all thatsignificant. However, we must consider the fact that SILVER/USD had been caught in a dramatic long-term downtrend that had produced very little upside price movement since July 2016.

If we look at this same catalyst event on the SILVER/USD daily charts, we can see that Kumo support lies within close proximity to the current market valuation. This is another highly encouraging element foranyone bullish on assets tracking the value of silver. As long as markets can hold these levels (and notbreak downward through the Kumo), the implication is that SILVER/USD will be in a position to moveabove the September highs of $19.65.

Of course, all of that will depend on price performances seen in the shorter-term charts. Interestingly, weare starting to see similar events unfold on the SILVER/USD hourly charts (and this largely supports thebroader thesis).

Traders that are familiar with the practice of Fractal Analysis might view these recent developments asparticularly exciting, given the ways they suggest an extension of the prior bull move that generated theMay-June price breakout in SILVER/USD.

What's notable here is that the short-term Ichimoku Cloud break (on the hourly charts) shares many of thesame features that were present during the May-June catalyst event. On the hourly charts, there is a bitmore distance present between price and the Kumo, so this actually suggests we could still see somefurther downside without eroding the bullish bias for SILVER/USD.

Furthermore, this recent break of cloud resistance on the SILVER/USD monthly charts was accompaniedby an overbought surge in the Connors RSI indicator reading. When I use the Connors RSI indicator, Iwill generally look for bullish/bearish divergences rather than instances of price extremity. The reason forthis is that the indicator tends to send many more signals when compared to the traditional RSI reading.In this case, the Connors RSI projected upside price moves (based on the divergence) and this is anotherfactor that points to an eventual re-test of the September highs. For more information on how I interpretthese specific indicator readings, I encourage readers to review my Connors RSI Trading Tutorial for amore detailed explanation of how I conduct my price analysis.