The silver pullback we’ve been waiting for is finally here.
When we last looked at the metal in early July, it had rallied from less than $19 per ounce to more than $21. And it had just broken out of a long-term consolidation pattern.
[ad#Google Adsense 336×280-IA]I said the metal would likely rally to $26 sometime later this year.
But I warned that silver was “wickedly overbought” in the short term and was vulnerable to some downside action.
I advised traders to hold off buying silver until it pulled back to around $20.
It took around five weeks to do so, but silver fell below $20 per ounce on Tuesday.
And that means it’s time to buy.
Take a look at this updated chart of silver…
When we looked at silver in July, it was bumping up against the blue down-trending resistance line. And both the 14-day relative strength index (RSI) and the full stochastics – two measures of overbought and oversold conditions – were extremely overbought. Similar readings flashed in mid-2013 and this past February before sharp corrections in the price of silver. So the metal looked set for a pullback.
Now, you can see that silver has pulled back from its blue down-trending resistance line. And the 14-day RSI and full stochastics are at oversold levels that typically precede rallies in the price of silver.
So I like the idea of buying silver here.
That doesn’t mean you should leverage your home and put everything you have into the metal. There’s still room for the silver price to work a bit lower.
But if you believe, as I do, that this is the beginning of a new bull market for silver, now is the time to buy before it makes another move higher.
Best regards and good trading,
Source: Growth Stock Wire