Silver’s Breakout

There’s been plenty of coverage over the past week, about silver’s apparent ‘breakout’.

We may have a sustainable breakout, or there may be something else in the works.

As of this post, silver futures opened essentially unchanged, edging slightly higher (as of 7:04 p.m., EST).

With that said, we’ll look at the longer-term view of silver and specifically, the ETF tracking fund, SLV.

Silver SLV, Weekly

The smaller (magenta) wedge pattern at left of the chart, shows a sustained breakout.

That move culminated in the blow-off top, late April 2011.

From the initiation of the breakout (week of 8/27/10), to the first retrace was a Fibonacci 8-Weeks of higher highs, and higher closes.

There was a small amount of congestion for one month, in January 2011. Then, SLV continued on higher.

On a monthly scale, silver SLV, essentially went straight up for a Fibonacci 8-months with only one month lower, a total duration of 9-months.

You can almost see where this is going.

With the current ‘breakout’ (if we’re in one), the market may post an impulsive move, or alternate (from the prior wedge breakout) with some kind of choppy action.

As the chart implies, we’re at The Danger Point®, where price action’s hovering between a wedge pattern breakout, or throw-over.

Stay Tuned

Charts by StockCharts

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The Danger Point®, trade mark: No. 6,505,279