Silver Pushing Resistance - Market Analysis for Aug 16th, 2010

It is interesting that silver prices and the iShares Silver Trust (SLV) are up nearly 2% this morning, in sympathy with higher gold and a pullback in the dollar, but perhaps most importantly in sympathy with a sharp upmove in the Shanghai Composite Index (+2%), which suggests strongly that China is not slowing down nearly as much as the financial press would like us to believe and could very well become an increasingly supportive factor for industrial (and precious metals).

Let's notice that the SLV is pushing up against its near-term resistance line at 18.12, which if hurdled and sustained should trigger a run at its more important May-Aug resistance line, now at 18.43. In that all of the action off of the May 13 high at 19.44 has taken the form of a large coil-type congestion pattern, a sustained upside penetration of 18.43 will argue that the price structure is emerging to the upside from the coil and is in the early stages of a new upleg that has measured upside potential into the $20 area next.

Only a failure to climb above key resistance, followed by a downside violation of last week's low at 17.43, will damage the developing bullish pattern.

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