Inspecting the silver monthly chart exhibited below, you can see silver’s trend changed to the upside in October of 2009. After its five-month extreme high was registered in December 2009, silver confirmed to me it was in a longer-term trend on the monthly chart in September 2010.
Silver futures on the monthly chart have now changed trends to the downside last month, so we still have three more months for it to put in its extreme low. Silver could go as low as $22 and still not confirm that it is in a longer-term downtrend on the monthly chart.
Silver Monthly Chart
The trend on the monthly chart for gold futures changed to the upside in 2009 and confirmed mid-2010 that it was in a longer-term trend up. Gold on the monthly chart has yet to even change trends to the downside, so it will be some time before it can qualify for long-term confirmation.
Gold Monthly Chart
U.S. Dollar Index
Strength in the U.S. dollar continues to add pressure to gold and silver prices. Oftentimes as the dollar rises, commodities decline and vice versa. On the daily chart, the U.S. dollar has given several buy signals and confirmed that it is in a longer-term uptrend. The trend is up on the weekly chart, but the dollar index still has to put in its five-week extreme high before I can get longer-term trend confirmation.
On the U.S. dollar index’s monthly chart, the trend is up and I have a buy signal, but my expectations for an upward move are tempered as the dollar has been range-bound and choppy on the monthly chart. In my opinion, over the next few months the dollar may become overbought and see a decline that would be bullish for gold and silver prices.
Disclaimer: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. Futures, options and forex trading are speculative in nature and involve substantial risk of loss. All known news and events have already been factored into the price of the underlying commodities discussed.
Contact Larry Baer at at [email protected] or call (312) 277-0112. To sign up for my free daily charts and setups newsletter go to www.larrybaer.com or http://www.zaner.com/offers/?page=1&ap=lbaer&rid=assets.