Time for a checkup on the rally starting with silver, which is trying to take over leadership, per the futures charts below. Please click for clearer views.
The best target for this rally has been around 18.70. It’s super bullish but overbought by its distance from the daily chart’s SMA 50.
The weekly chart expands the view. While I believe that this rally is going to make a higher high above the 2016 high at 21+, the blue box shows what could be an equivalent situation to the current one where silver pulled back hard to support before taking the final leg to its big rally. Please understand that this is not a prediction, because I don’t know what the future holds. But it is a notice that silver is very overbought and approaching resistance. Again, it’s a ‘traders and investors know who you are’ type situation.
I believe the rally is ultimately going higher, but it can take a significant pullback at any time now. A break through resistance would target the 2016 high, creating a very bullish and very high risk situation.
Gold (weekly chart) is also overbought and we are solidly in the original target zone now. I originally thought this would provide solid resistance and likely start a pullback. But so far old yeller is just dwelling here and the longer it dwells the more it thinks about a surge to the next target, which is 1706 based on the best measurement of the 2013-2019 pattern. If it should break through resistance and surge to that area I would recommend people prepare in what ever way they would for some volatility in the near-term thereafter. As it is, gold has not broken through resistance so, while extremely bullish, it’s overbought and at resistance. Considering the CoT alignments, it’s vulnerable.
HUI (weekly) broke through the resistance area that we had noted did not look overly formidable. As with silver, I expect HUI to eventually make a higher high to the 2016 high. As it stands now it has broken out above 220 resistance and the next target is way up there at 284. Depending on what gold and silver do at their nearest resistance areas (gold is at its resistance and silver is approaching 18.70) Huey could take an interim pullback. But taking the technicals at face value, it has broken out, is very overbought and it would probably take a final momentum surge to get it to 284. If people are not taking profits at or below that level then they are true believers waiting for our best target in the mid/high 300s or perhaps even a major new bull market. Personally, I’ll be looking to trim some profits and re-seed along the way.
Just a quick overview of the sector with more to come in NFTRH 566.