SIL – Silver Miners ETF Technical Analysis

by Olivier on November 12, 2012

Quick look at the technical picture of SIL – Global X Silver Miners ETF. Within the precious metals sector the mining stocks have recently started to outperform the metals. The silver miners have been stronger than the gold miners so they should continue to assume their leading role on a breakout to the upside. The price consolidation over the past few weeks comes after a strong thrusting move. According to theory the prior uptrend should resume and thus result in price breaking out to the upside.

SIL - Silver Miners ETF Technical Analysis

Click the image for a bigger chart

I see a potentially bullish inverse head and shoulders pattern in the making. Additionally, price has taken out an important downtrend line. A pullback towards the weekly moving average 30 which would coincide with a retest of the downtrend line looks like the most likely outcome. Keep in mind technical analysis is not about ‘predicting’ in the literal sense of the word. TA gauges odds, outlines various scenarios and enables you to establish positions with proper risk management when the market confirms a specific scenario. As traders we watch price and constantly adapt to the market’s ever changing message.

Conclusion: The precious metals sector most likely needs more time to gather steam for a sustained move to the upside. Right now it doesn’t look like the right time to aggressively build positions. The market is telling us to prepare to build positions soon though. How soon? I have no idea. Price action will tell me.

A successful speculator bases no moves on what supposedly will happen, but reacts instead to what does happen. – Max Gunther ‘The Zurich Axioms’


Buenas noches!

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