Silver ETF SLV Hits Higher High on 4 Month Record Volume Today

The SLV ETF continues to trade like a champ with 35.78 as near term support.  The SLV today pushed to a higher high on record volume, the highest in about 4 months.  This to me is a bullish sign despite the fact that it had a somewhat bearish looking reversal by end of day.  In the after hours session the SLV managed to remove most of the intra day decline today.

I have drawn in some channel support lines on the SLV chart since the August 2010 time frame and I am able to start to speculate on some early possible targets and resistance points for the SLV ETF.  The SLV ETF is roughly about one dollar less than the futures price of silver.  I drew in some channel resistance lines that look like broadening wedges on the SLV ETF and it makes the case that the SLV will run into a strong resistance zone near the 41 to 42 range.  This is interesting because it also matches close to the silver price peak that I pointed out in the silver futures in 1980.

If you look carefully at the chart below you will see how I come to the conclusion of a 41 to 42 range stopping or pausing point for the SLV.  It is a point where the current broadening wedge meets the channel line of the previous run up in the SLV from the 2010 time frame.

slv20110324

I would not be surprised to see the SLV push up into that range and then get some type of sell off going.  In the 2010 period, the SLV briefly pushed up above the top channel line but then fell back down quickly again to the bottom of the broadening wedge during that time frame.

Assuming the SLV does somehow make it up to 41 to 42 range, I do not think this has to be necessarily ‘the top’.  If we look at the behavior of the gold price as it meet its old 1980 high there was  a period where it had a reaction to the old 1980 high at first but then surged above it by a few hundred dollars and then only later had a very sharp downward correction.

Whether the SLV will do the same or not is unknown, but it is entirely possible.  For now the target seems to be in the 41 to 42 range as the maximum near term possible move.

I would definitely not want to see a break under 35.78 tomorrow or next week as it could possibly change the near term high momentum picture.

Posted in Commodity ETF
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