Silver has certainly participated in the Metals boom of the last two years, but all eyes have been on Gold during its historic push to new all-time highs. However, Silver has outpaced Gold 136% to 86% over the last 20 months and could be on the verge of another major breakout opportunity. Let’s take a look!
The daily chart of the continuous contract for Silver futures shows price has formed a well-defined triangle pattern, which could offer a breakout move worth 2.65 points.
Moreover, the three pivot-based EMA’s that are plotted show a neutral state, which sets the stage for a PEMA Breakout opportunity.
A neutral state occurs when all three EMA’s are flat, or horizontal. This usually implies that price is coiling and awaiting trend resolution.
This is the foundation of the PEMA Breakout setup, which I have detailed in my upcoming FREE eBook Profiting with Pivot-Based Moving Averages – which will hopefully be released next week! Breakouts from this pattern can usually lead to great moves in the market, especially when they occur in higher timeframes.
The fact that a clear triangle has formed, plus the neutral state in the EMA’s, indicates a major breakout opportunity could be ahead for Silver. Since the pattern has formed at the top of a recent uptrend, we should expect an upside break, but a breakout in either direction should lead to a nice move of about 2.65 points – which is the measurement of the back end of the triangle.
We need to see a confirmed breakout with a daily closing price beyond either $18.30 or $19.50, which could happen anytime in the next week of trading.
I’m eager to see what happens!
By the way, $CME reached the $282 target that we wrote about Last Week! What a drop! Check out the chart!
Notice that the same pattern that sparked the decline (the Outside Reversal signal) was the same pattern that set off many of the indexes during this recent decline (like $SPX and $RUT)…what a pattern!
Cheers!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss