by Clive Maund, Streetwise Reports:
This could be an optimum time to buy silver and high-quality silver stocks, says technical analyst Clive Maund, as he expects a sizeable silver rally to ensue.
June is silver’s worst month of the year by far, on a seasonal basis, and its price dropped significantly this June. However, we are now well into July, and July is seasonally silver’s 2nd best month of the year, and as the month got off to a bad start, it is reasonable to expect things to look up, especially as silver put in what looks like a high-volume Reversal Day on Friday, when it broke down below support but then got back above it later in the day.
We can see silver’s dive into what looks like a capitulative high volume Reversal Day on Friday to advantage on its 6-month chart, and the chance of its having hit bottom is increased by the fact that there was a full moon at the weekend.
The origins of the support underpinning the silver price here can be seen on its 20-month chart. It derives from the December low which formed at support above a trading range that developed from February through April last year. We may be seeing a Double Bottom form with that low.
Like gold, silver’s long-term 8-year chart appears to show a large Head-and-Shoulders bottom completing, which is downsloping in silver’s case because silver traditionally underperforms gold towards the end of bear markets (and early in bull markets). With the price near to the Right Shoulder low after its recent drop, we could be at an optimum time to buy the sector here from a price / time perspective.