-- Posted 7 November, 2010 | | Discuss This Article - Comments: Source: SilverSeek.com

Silver's corrective phase turned out to be very short-lived - it only lasted a week before it turned higher again, and then blasted out to new highs on the inflation friendly news from the Fed last week. We can see all of this on the 6-month chart and also how silver is becoming very overbought once more as it approaches the top return line of a tentative parallel uptrend channel - tentative because, like gold, silver is in position to go into parabolic acceleration mode in which, of course, uptrend lines are rendered obsolete, at least temporarily. The current steep uptrend may even approach $30 before silver stops to consolidate/react.

 

We can get a clearer idea of where the current vigorous intermediate uptrend, meaning the uptrend that began in mid-late August, is likely to end by looking at the long-term 11-year chart for silver. On this chart we can see that silver's clear breakout above the resistance near its 2008 highs has taken it into "blue sky country", where there is no overhanging supply. It now looks like silver is going to stage a move of similar magnitude in percentage terms to that which occurred from 2005 into 2006, or even greater, and if that is the case then it should rise to the $36 - $40 area before this uptrend is exhausted.

 

As usual, much of what is written in the Gold Market update is equally applicable to silver and readers are referred to it.

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