Silver Looks Poised for Gains, but Patience is Key

Precious metals investors who are priced out of palladium and gold can always look at silver as an option to get alternative assets exposure, but in today’s market, patience is key. From a technical perspective, it’s a matter of looking at where its price falls in line conjunction with recent chart patterns.

“It’s very common for attempts to push up through to resistance to fail the first time,” said David Smith, senior analyst at the Morgan Report. “The silver price still managed to close above $18, which is a breakout on the descending triangle chart.”

Delving deeper into the charts, silver hit session highs in Tuesday’s trading session by the middle of the day, which feeds into strength for the bulls. A key price level to watch, according to some analysts, is $18.35.

Silver chart

“December silver futures prices were nearer the session high at midday,” wrote Jim Wyckoff in Kitco News. “The silver bulls still have the overall near-term technical advantage. A four-week-old uptrend is in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $18.35 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.18. First resistance is seen at $18.00 and then at this week’s high of $18.145. Next support is seen at today’s low of $17.605 and then at last week’s low of $17.44.”

A Leveraged Pair of ETFs to Consider

Traders looking to play silver’s reaction to the recent Fed rate decision can look to leveraged ETFs like the VelocityShares 3x Long Silver ETN Linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV) and the ProShares Ultra Silver (NYSEArca: AGQ).

USLV seeks to replicate, net of expenses, three times the S&P GSCI Silver index ER. The index comprises futures contracts on a single commodity. The fluctuations in the values of it are intended generally to correlate with changes in the price of silver in global markets.

AGQ seeks daily investment results that correspond to two times (2x) the daily performance of the Bloomberg Silver SubindexSM. The fund seeks to meet its investment objective by investing, under normal market conditions, in any one of, or combinations of, Financial Instruments (including swap agreements, futures contracts and forward contracts) based on the benchmark. The types and mix of Financial Instruments in which the fund invest may vary daily at the discretion of the Sponsor.

For more market trends, visit ETF Trends.