The price of silver hasn’t changed much in the past two weeks. But the chart has turned bullish.

When we looked at silver last month, the metal had fallen for 12 straight days.

[ad#Google Adsense 336×280-IA]It was oversold and was set up for a bounce ā€“ if only to relieve those oversold conditions.

But I suspected that any bounce would only be temporary.

There wasn’t any positive divergence on the chart. So I said it might take a few weeks for silver to set up for a stronger rally.

We now have that setup.

Take a look at this updated chart of the iShares Silver Trust Fund (SLV)

As the price of SLV has continued to drift lower over the past two weeks, the moving average convergence divergence (MACD) momentum indicator has been rising. This sort of “positive divergence” is an early warning sign that the momentum behind a trend is fading, and the trend may be about to reverse.

The SLV chart showed a similar setup in August. Back then, SLV was oversold. It had positive divergence on the MACD indicator. And the stock was stretched far away from its 50-day moving average (DMA) line.

SLV was poised for a big move, and it didn’t disappoint. It took just more than one week for SLV to rally 6.5% ā€“ all the way back up to its 50-DMA.

Silver is set up for the same sort of move right now.

Aggressive traders can buy SLV here at about $13.30 and set a stop at $13.15 in order to minimize the loss if we’re wrong on this trade. They can then look for a rally back up toward the 50-DMA at about $14.38.

Best regards and good trading,

Jeff Clark

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Source: Growth Stock Wire