In the wake of the Federal Reserve Open Market Committee meeting and decision to hold rates steady, the mining complex held its early gains and increased them somewhat during the day. This was the the case also for the Global Silver miners ETF (SIL:arcx).
This market is trending higher since the low in January this year. The peak in August doesn't display the correct features from a cycle perspective nor a price perspective to be a peak of larger scale thus we are interested in buying dips and are maintaining a bullish bias towards this market.
The low seen on September 1 is indicating a possible end to the correction from the August peak as we had a 180 degree time cycle alignment with the whole advance from the January lows into the peak in August. At the same time the market turned on a Gann price pivot, which is indicative of a low within the current trend higher and a possible challenge of the previous highs.
The oscillators are sure looking bullish and has turned higher from oversold levels, and with the price low of SIL:arcx on September 16 they have made a higher low and are now heading higher. Ideally at least the Slow stochastic indicator (STOC-S) should now get into an oversold reading before turning lower again.
Key support is located at $43 and an intermediate support is found at $46. Resistance is now found at $49 and $53.
Management and risk description
The plan is to buy the SIL:arcx for a continued move higher in the days and weeks ahead. One can long on price action above $46, -- ideally, we see a dip to $46.50 before a continued move higher. The target is set to $49 and $53. The stop could be placed at $43 or if one like a tighter stop upon a daily close below $46.
The risk to this setup is a larger correction then we have seen thus far. The thinking goes that we in such a case should see such an outcome quite fast. Sometimes the kind of bullish price action we saw yesterday experiences an immediate fade.
Entry: buy above $46.
Target: $49 and $53.
Time horizon: 1-3 weeks.
SIL:arcx daily chart
SIL:arcx daily development chart
— Edited by Martin O'Rourke
Non-independent investment research disclaimer applies. Read more