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Silver Price Analysis: This Confirms The Continuation Of Silver’s Rally

Gold South Africa / July 13, 2016

Silver Price Analysis 2017/2016

On the silver chart, is a classical major reversal pattern referred to as a Head and Shoulders Bottom. Major reversal patterns form after a downtrend, and its formation normally confirms a change in trend. Below, is a silver chart (all charts from tradingview.com), with the pattern highlighted:

chart111

The existence of this pattern, and its recent breakout confirm that the December 2015 bottom in silver is actually the bottom for the correction since 2011. This is a precious gift, if you were still unsure whether to get into silver or not. This was also confirmed by the fact that the USD/ZAR made a significant top very close to the December 2015 silver bottom USD/ZAR (a USD/ZAR top is a good signal to confirm a silver bottom).

The trend has changed, and prices will continue to rise over the coming months. The breakout has occurred, as pointed out, and it fulfilled all the requirements to be considered valid. The tricky part of this kind of pattern is the issue of whether price will retest the breakout area, which is around $18. If price retests the breakout area, you should take it as a great opportunity to get silver at an ideal entry point.

Another interesting thing about this pattern is the fact that it is upward sloping, which makes it extremely bullish. Furthermore, this pattern is at the trigger point, of a larger pattern on the silver chart previously pointed out.

The following fractal analysis supports the extremely bullish outlook:

On the silver chart, I have highlighted two patterns that appear similar. I have marked them 1 to 6 to show how they might compare. Both patterns start from a significant silver top. If the comparison is justified, then we are currently just after point 6, the point where a major breakout occurred (this concurs with the Head and Shoulders Bottom pattern breakout).

chart222

Due to the nature of the more current pattern (a flag-type formation) it could easily gap up$20/$30 in a very short time.

These articles are provided for informational purposes only and were obtained from publicity available sources on the Internet. These articles do not constitute financial advise or trading recommendations by Global Asset Management ("Global"). Global neither warrants the accuracy or completeness of the information contained in these articles, undertakes to update them, nor is it responsible for any omission or error contained in these articles. Viewers are encouraged to conduct, and should only rely on, their own independent research.
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