Silver prices may breakout strongly from the pennant pattern

Silver prices are forming a pennant pattern (shown below in the chart) near its long term trendline inside a short term uptrend channel. And the outlook proves difficult to determine since it would require the investor to choose between two different analysis.

After the horrible crash in September, silver has been trading in an uptrend channel. The case for a bearish possibility remains in its technicals since prices are now near a long term trendline which propelled silver to near $50′s in May. Combined with the fact that the whole uptrend move since October can be viewed as a bearish flag.

The bullish case for Silver remains in the macro-economic fundamentals. With Italian bonds hitting 7%, bond markets are clearly indicating that the Euro is out of favour with investors. And as such, silver in a safe haven perspective looks attractive. With such an outlook, the current pennat pattern can be seen as bullish in context of the uptrend since October.

But with prices near a long term trendline and trending in a nice uptrend channel, price action may provide the clue as to whether this will be the pivotal moment in silver’s future trend. However, the breakout may prove to be a strong move. – CommodityOnline

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Posted by Silver Guru on Nov 20 2011. Filed under Silver Analysis, Silver prices. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry