Tuesday, September 23, 2014

Something interesting about the silver chart

I was looking at the daily candles for silver, marvelling at how the price has stayed below its EMA(10) for two months.

I mean really, every single day for 2 months, it's been below its EMA(10). That's a very short EMA, and thus very unrelenting selling.

I wondered how often this has happened recently, and so I looked at the weekly candle chart:

Since the great poop of early 2013, silver has only managed to go straight down for 3 months at a time: Sep-Nov 2013, Mar-May 2014, and right now.

Even if silver is totally screwed forever from this day forward and one day we'll be wiping our asses with it, nevertheless as a production-constrained commodity it should only drop in a slow trend, not a catastrophic collapse. These last 3 multi-month drops were too steep to be market-rational behaviour, and thus each caused silver to pop back up.

The caveat to the above is: look what happened last time multi-year support got pooched, back in April 2013.

But the counterargument to that is: you really expect silver to drop 40% from here before Xmas?

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