Sunday, September 18, 2011

Still Expecting Rally to Be Near Completion

Click on Chart to Enlarge

I expect this rally to be very near completion here. See the notes on the chart above. It would be nice to see some better signs of divergence on some oscillators before entering short, but basically we are in the window where we could take the next stochastic sell signal for a new bearish swing trade. A couple things not on the chart......there are two time areas which look to be reversal times based on some cycles I have looked at. The next one is at the end of next week around Sept 26th. The next zone after that I believe to be the 3rd-4th week of October. So the dashed projection lines on the chart use those time frames to show an approximate expectation of what will occur IF this is indeed a bear market rally to be followed by new corrective lows.

Click on Chart to Enlarge

The lower wedge line on SLV has been broken now, including a gap down on the day of the break. Now there has been a relatively weaker little move back up under trendline which could be the final retest before a major swoon in silver prices. Indicators to use to take a new trade would be a ADX/DMI sell, and/or a close below the lower bollinger band with the bands expanding. In many cases the stop will be safe a tick above the high of the day that closes below the lower band on a breakout move like I just mentioned.

On a related note, the US Dollar Index look like it is in the process of backtesting its breakout of 76.25. I have no reason to believe it won't be successful, so when that completes, we should see pressure on commodities again. Crude oil looks to be forming a rising wedge, that may indicate further downside ahead very soon.

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