Waiting for Silver's Upside Breakout

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"All silver needs now is one last push. . ."

Two months ago I stated that silver is inching closer to an upside breakout. It turns out that "inching" was the right word because since then silver has been moving at a snail's pace. Nevertheless, the huge accumulation pattern that silver has been building over the past three years remains intact, as can be seen on the following chart.

Spot NY Silver Daily Closing Price 1/4/00 - 7/16/10

The accumulation pattern on the above chart is nearly complete. All silver needs now is one last push above the neckline around $20. As I noted back on April 1st, silver looks ready to soar once that key level is hurdled.

In presenting my outlook for 2010I said: "We need to start thinking about silver hurdling above $50." Noting that this event was only a 20% probability in my view for 2010, I went on to add that "this important event—which is unimaginable to many—will I expect happen in 2011."

That forecast remains on track, but two events are necessary. The obvious one is that silver must first hurdle above $20, but secondly, silver needs to approach $30 this year. This $30 price target is needed to keep silver on track for challenging $50 next year.

Given that we are now in mid-July, the limited time constraint means that $20 needs to be hurdled soon if silver is going to reach $30 before the end of this year. As a consequence, the next few weeks will be critically important for silver.

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