Silver H&S and flag point to 25.60
- Posted by PeterLBrandt
- on December 21st, 2011
Charts produce double confirmation of a move to 25.03 to 25.60
There are four dominant technical characteristics on the Silver chart. A dominant technical characteristic is, in my way of charting, the pattern that is driving an underlying trend.
First, the market is still influenced by the blow-off top last April and May accompanied by unprecedented volume (read: “distribution of ownership”).
Second, the Silver market has an established downtrend on the daily chart. All longer-term moving averages are down. The market has formed an 8-month down channel. Anyone who purchased Silver since February 2011 has a loss.
Third, a 10-week H&S pattern was completed on December 13. This pattern has a target of 25.60.
Fourth, the market appears to be forming a brief 6+ day flag. Here is how Edward and Magee define a flag:
“A flag looks like a flag on the charts….the picture is naturally turned upside down in a down trend. It might be described as a small, compact parallelogram of price fluctuations, or tilted rectangle, which slopes back moderately against the prevailing trend.” [E&M, 5th Edition, pgs.168-173]
Flags tend to be “half-mast” configurations. If this flag serves a half-mast function, the distance from the Dec. 8 high to the Dec. 15 low should be duplicated downward from the Dec. 31 high. This would produce a target of 25.02.
Of course, this flag could be extended in height or duration or could even morph into a different probably continuation pattern. An advance above the Dec. 14 high would be the first indication of major morphing.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Peter Brandt entered the commodity trading business in 1976 with ContiCommodity Services, a division of Continental Grain Company. From his start in the commodity industry, Peter's goal was to trade proprietary funds. But, he first needed to learn the business. More »