Silver bulls were enormously
cheered last week as the industrial metal finally broke out of its narrow trading range with the March futures contract closing the week higher at $31.93 per ounce on the daily chart. The breakout co-incided with several other significant changes, not least of which was a move to a bullish trend on Thursday with the first green trend dot confirming this change in sentiment.
Next the heatmap also transitioned through to bullish (bright green) and last week’s upwards momentum was also fully supported by buying volumes on both the daily and three day charts. However, the our three day trend (which is also displayed on the daily chart) remains bearish for the time being but once this transitions to either white or green we can be sure this will give silver a further boost in the longer term.
However, from a technical perspective whilst we have a strong platform of support below in the $30-$31 price area we also have an equally important area of price resistance ahead which extends from the $32.50 per ounce region to the $35.50 price point of mid September 2012. For the current bullish trend to develop any sustained momentum we will need to see consistent and rising buying on both the daily and three day charts.
In conclusion a good time for silver bulls but expect price may run into some headwinds at the above levels.
By Anna Coulling