Silver finally hit the SMA 200 today and closed back above lateral support (daily chart).
That’s great. But if the precious metals complex is going to correct deeper then this man staring at the chart will respect the small H&S pattern which, if activated would target the 20 +/- area, finally taking out the 21.23 area that I originally expected to be tested on the correction.
However, if silver holds the SMA 200 and paints the thus far inactive H&S as a fake out, it could bode well for the rest of the PM sector, negating the prospect of new lows in HUI and a test of the lows in gold.
In short, I think silver is an important indicator here for more than just its own status. At this time it is intact and has made a healthy test of the SMA 200 (finally!). What it does from here will be rather important to precious metals traders/investors.
Thing 1: A healthy test of the SMA 200 is in the books and it’s off to the races, or…
Thing 2: An H&S pattern formed as a secondary high (double top) with the long-term breakout level of 21.23 possibly taken out. The sector never did get a noticeable (by me, at least) capitulation, after all.
