Silver's Potential Breakout: What to Monitor
Jesse Colombo recently published an update on the potential surge in silver prices. This followed the announcement by China of interest rate cuts and a sizeable stimulus package to bolster its ailing economy. These actions have led to a rise in commodities such as gold, silver, and copper, aligning with Colombo's bullish perspective on silver.
The Daily Chart of Silver
Silver's daily chart reveals that after peaking in May, the metal had been underperforming for several months. However, it recently broke above a downward trend line that began in May, closing above it last Friday. This breakout was highlighted in Colombo's original piece as a positive sign of strength. On Tuesday, silver surged 4.56%, reaching its highest level since May. Now, silver needs to close above its $32.50 resistance level with strong volume to confirm that the next phase of the bull market has begun. Once silver clears this resistance, it is likely to rapidly surge towards $50. This figure is considered an intermediate-term target due to its psychological significance and being the peak reached during the 1980 and 2011 rallies.
Silver Priced in Euros
To further confirm this trend, it is useful to analyze silver priced in euros. This approach eliminates the impact of U.S. dollar fluctuations, providing a clearer picture of silver's inherent strength or weakness. Interestingly, silver priced in euros often respects round numbers like €26, €27, and €28, which frequently establish key support and resistance levels. On Tuesday, silver closed above both the €28 level and a downward trend line that began in May, indicating a very bullish development. The final hurdle is for silver to close decisively above the €30 level on high volume, signaling that silver is ready to surge.
Silver Mining Stocks
Silver mining stocks, such as the Global X Silver Miners ETF (symbol: SIL) and the Amplify Junior Silver Miners ETF (symbol: SILJ), often reflect investor sentiment towards the metal and are important to monitor. A strong, high-volume close above certain resistance zones would signal that both silver mining stocks and silver itself are set for a significant breakout. After surging on Tuesday, both SIL and SILJ are very close to breaking out.
Gold and the Gold-to-Silver Ratio
Gold, a key influencer of silver prices, is creating a favorable environment for silver after breaking through two crucial resistance levels in the past month and a half. The gold-to-silver ratio is a valuable indicator for determining silver’s price direction. A double top chart pattern appears to have formed over the past two months, suggesting that silver may soon start outperforming gold.
Copper and the U.S. Dollar
The price of copper, often overlooked in silver's performance, has dragged silver down with it over the past several months. However, a rebound in copper prices should significantly bolster silver's rally. Additionally, the prospect of a weaker U.S. dollar as the Federal Reserve begins its rate-cutting cycle could be bullish for silver, gold, and copper. A close below the 100 support on the U.S. Dollar Index would strongly suggest a continued decline toward the 90 support level.
Bottom Line
As silver approaches a critical breakout, multiple indicators suggest a strong bullish outlook. Recent economic developments, such as the U.S. rate cut and China's stimulus measures, have fueled momentum in commodities like silver, gold, and copper. The ability of silver to break through key resistance levels, coupled with potential strength in silver mining stocks and a weakening U.S. dollar, reinforces this bullish outlook. With the gold-to-silver ratio showing signs of decline and copper rebounding, the stage is set for silver to make significant gains. Investors should keep a close eye on these developments as silver's next major bull market may be just around the corner. What are your thoughts on this matter? Share this article with your friends and be sure to sign up for the Daily Briefing at 6pm every day.
Silver's Potential Breakout: What to Monitor
Jesse Colombo recently published an update on the potential surge in silver prices. This followed the announcement by China of interest rate cuts and a sizeable stimulus package to bolster its ailing economy. These actions have led to a rise in commodities such as gold, silver, and copper, aligning with Colombo's bullish perspective on silver.
The Daily Chart of Silver
Silver's daily chart reveals that after peaking in May, the metal had been underperforming for several months. However, it recently broke above a downward trend line that began in May, closing above it last Friday. This breakout was highlighted in Colombo's original piece as a positive sign of strength. On Tuesday, silver surged 4.56%, reaching its highest level since May. Now, silver needs to close above its $32.50 resistance level with strong volume to confirm that the next phase of the bull market has begun. Once silver clears this resistance, it is likely to rapidly surge towards $50. This figure is considered an intermediate-term target due to its psychological significance and being the peak reached during the 1980 and 2011 rallies.
Silver Priced in Euros
To further confirm this trend, it is useful to analyze silver priced in euros. This approach eliminates the impact of U.S. dollar fluctuations, providing a clearer picture of silver's inherent strength or weakness. Interestingly, silver priced in euros often respects round numbers like €26, €27, and €28, which frequently establish key support and resistance levels. On Tuesday, silver closed above both the €28 level and a downward trend line that began in May, indicating a very bullish development. The final hurdle is for silver to close decisively above the €30 level on high volume, signaling that silver is ready to surge.
Silver Mining Stocks
Silver mining stocks, such as the Global X Silver Miners ETF (symbol: SIL) and the Amplify Junior Silver Miners ETF (symbol: SILJ), often reflect investor sentiment towards the metal and are important to monitor. A strong, high-volume close above certain resistance zones would signal that both silver mining stocks and silver itself are set for a significant breakout. After surging on Tuesday, both SIL and SILJ are very close to breaking out.
Gold and the Gold-to-Silver Ratio
Gold, a key influencer of silver prices, is creating a favorable environment for silver after breaking through two crucial resistance levels in the past month and a half. The gold-to-silver ratio is a valuable indicator for determining silver’s price direction. A double top chart pattern appears to have formed over the past two months, suggesting that silver may soon start outperforming gold.
Copper and the U.S. Dollar
The price of copper, often overlooked in silver's performance, has dragged silver down with it over the past several months. However, a rebound in copper prices should significantly bolster silver's rally. Additionally, the prospect of a weaker U.S. dollar as the Federal Reserve begins its rate-cutting cycle could be bullish for silver, gold, and copper. A close below the 100 support on the U.S. Dollar Index would strongly suggest a continued decline toward the 90 support level.
Bottom Line
As silver approaches a critical breakout, multiple indicators suggest a strong bullish outlook. Recent economic developments, such as the U.S. rate cut and China's stimulus measures, have fueled momentum in commodities like silver, gold, and copper. The ability of silver to break through key resistance levels, coupled with potential strength in silver mining stocks and a weakening U.S. dollar, reinforces this bullish outlook. With the gold-to-silver ratio showing signs of decline and copper rebounding, the stage is set for silver to make significant gains. Investors should keep a close eye on these developments as silver's next major bull market may be just around the corner. What are your thoughts on this matter? Share this article with your friends and be sure to sign up for the Daily Briefing at 6pm every day.
