Silver ETF (SLV) A Technical Analysis

John’s Technical Analysis- Silver ETF- SLV

iShares Silver Trust (SLV)

The ETF “iShares Silver Trust ,” that uses the symbol “SLV,” has been influenced by the stock market this week. Its stock price stands at $17.41. As we learn in MSN Money Snaphot they write this about the Fund: “The objective of the investment is to reflect the price of silver owned by the trust less the trust’s expenses and liabilities. The fund is intended to constitute a simple and cost-effective means of making an investment  similar to an investment in silver. Although the fund is not the exact equivalent of an investment in silver, they provide investors with an alternative that allows a level of participation in the silver market through the
securities market..”

Friday was an off day for everyone considering the wens of the fines levied against Goldman-Sachs. So, it was a good time to consolidate for everyone. In the midst of this comes some daunting news that may want you to invest in the metal.

“Silver has been performing very strongly over the past month, has broken through previous resistance and continues to move higher despite the large concentrated short position by commercial traders (JPM and HSBC) on the Comex. There are signs that an increasing number of hedge funds and individual investors are demanding delivery of physical silver as the dangers of unallocated paper promises become more widely understood…Given the massive leverage (as high as 100-1) used by the banks that are naked shorting silver with paper contracts on the Comex, speculation has increased that a group of wealthy investors, Asian traders or funds may look to exploit this long-running manipulation scheme. This would be accomplished by demanding a huge quantity of the physical metal be delivered all at once, thus forcing the naked shorts to scramble to come up with the metal that is known to be in short supply. The short squeeze would then send the silver price blasting dramatically higher. All of this adds up to what could be a once-in-a-lifetime opportunity to generate massive returns in a short time period. If you are not already invested in silver, you just might miss the ride.” (Jason Hamlin Seekingakpha.com)

So, soon we have a good opportunity to move up with silver.

Support- SLV has built a nice support level in March at about 17.2. We have about 5 touches there on the challenge to break through before it did. After that, the next level of support would come at 16.4, this level would be considered a little stronger because it can be seen to spread out a little more over time. If the metal continues to drop next week, these are the levels we are going to look for. 

Resistance- We can see our first level would be right before our drop. We were pushing against the 18.15 level a few times but not pushing through it., so this would be our first challenge to push through that level. After this, we have our first strong level at 18.45 as you can see, we peaked here a couple times without
really pushing through. This is a major level to break through in our bullish journey. 

Overall Outlook- With the short squeeze that is possible on SLV here soon, we may see a spike in price and this would be nice for investors. Now, we really do not know if this will happen but the signs are there that it could. 

We like the Ascending Triangle Pattern we see forming in this weekly chart that displays a continued upward movement with strength. We could see a consolidation take place very soon and we could see the stock move down, even for a few months, but we think long term it will come right back and challenge that 18.45 level before the year is over.