Each week, we publish a summary outlook for silver and the iShares Silver Trust (SLV). During the course of the past week, silver received two upgrades in our matrix: the short-term trend went from bearish to neutral, and our value indicator went from neutral to favorable. Silver has many mountains to climb, but a long journey always begins with a single step.
We notified our subscribers that we went long SLV last week at $14.83. We have no definite price target or stop; on the other hand, we monitor our decision matrix and manage our position dynamically. Our general rule is to stay long when at least two of our indicators are positive.
Technicals and Key Levels
Last week, the silver and SLV charts were decidedly bearish, and on most longer-term charts, it is very clear that silver remains in a downtrend. It is imperative for importance for bulls that silver break back above $16/oz (about $15.18 for SLV). Once it does that, it will have important tests near $16.50 and $17/oz as it seeks to reestablish a confirmed up-trend.
The Fibonacci retracement for SLV shows retracement back to $14.50, with next targets of $15.60, then the 100 week moving average near $16/share. Above this, SLV will face tests near $16.40 with the 50 week moving average and the 50% Fibonacci retracement level. RSI is moving up from oversold on a weekly basis.
On a four-hour chart, silver is shown to be battling the all-important $16/oz level while price has recovered back over key momentum moving averages. Above $16/oz, we see a lot of room to move back towards $16.50 and higher.
Precious Metal COT Report
This week’s COT report was very bullish for both gold and silver. Through July 10th, commercial banks continued to rapidly reduce their net short position, while hedge funds rapidly reduced their net long position.
The “smart money” commercials have reduced their net short position in COMEX silver futures to their lowest level since late 2015. The reader can see how low…