Gold and Silver and probably 2 of my least favorites issues to analyze, gold is in a potential bubble and silver has been manipulated more then any one single issue I can think of and compared to gold (geologically-as in the ratio of gold vs silver in the ground) silver is way undervalued compared to gold.
First lets start by looking at the long term which is a good place to start when analyzing an issue, you have to know where you are in the trend first.
This 5-day chart shows an RSI negative divergence at the top, which isn't very strong and a recent RSI positive divergence. The top was the COMEX manipulating silver with 5 consecutive margin hikes even after they killed silver, they kept going. If you click on the chart you should get a larger view, note the candlesticks on this 5 day chart, you probably wouldn't see them on a daily chart' they form a near perfect Doji Star reversal that is confirmed on exceptional volume, but that had a lot to do with the COMEX. Note the trend as well, lower highs and lower lows, but possibly SLV could break that and make a higher high. There would not be a trend in place until it also made a higher low and moved off that low. My best guess by looking at this chart alone is for a bounce and likely resumption of the downtrend.
Looking for correlations, you don't find much. Usually with gold there's either a market correlation depending on monetary policy (QE makes for a good market correlation) or there's a flight to safety inverse correlation. Silver is not as correlated to the $USD as you might think.
This is the correlation to the Euro/$USD, in red it's useless because of the COMEX hikes, in white it's a bit better and there's a rough correlation to dollar weakness (again, QE produces dollar weakness so in a QE environment, the correlation is better and the PM's benefit).
As for market correlation, here's the SPX, virtually useless, but I did find one correlation that is predictive and that is valuable.
Here's the Australian dollar or FXA, note the Aussie topped in August, SLV soon followed, it topped again in November, SLV soon followed, it made a higher low in early December, that sent SLV higher, unfortunately there's no divergence to tell us what comes next, but keep this in your bag of tricks for SLV and watch for a move in the Aussie, likely it will tell you where SLV is going next.
The next best thing we can do is look at the Australian dollar and see what 3C says...
On an hourly chart, the FXA is in trouble, this would suggest that SLV will be in trouble, but there seems to be a 2 week lag between FXA's moves and SLV following.
Very short term we have a positive 5 min divergence suggesting a FXA bounce, so this may very well bounce SLV a bit.
The 2 min chart shows the same. So based on what I see thus far, it looks like SLV could be in for a bounce and then potentially a dip.
Now to look at 3C/SLV short term and see if we have some confirmation...
The 10 min chart is showing a positive divergence, it's several days long, that's in the bounce category.
We have a positive divergence on the 5 min chart too, a couple of days long, so that hint at a bounce.
And today it put in several positive divergences and some productive price movement, lifting off its intraday lows.
This area around $34 is where I believe the new JPM line in the sand to be, although I have no idea if they still hold the SLV short and how big it may be.
So far the Trend Channel has kept this move in the long trade, I would not short SLV until a break below the Trend Channel, just under $32 on a closing basis.
Longer term on a 2 day chart there is a "possible" small positive divergence, it's hard to say definitively because some other timeframes don't support that view.
Like this hourly chart, it's clearly negative, but so was the FXA chart in this timeframe.
The 30 min chart went from confirmation to a negative stance, same as FXA.
The 15 min chart is the same, however, considering resistance at the $34 area, a bounce that breaks it on a head fake move seems reasonable. The move certainly could be traded from the long side, but we would need to check the breakout as I suspect it would be a head fake / shakeout move, but it makes sense with the long term and short term charts, a bounce that breaks $34 followed by a move down, so there are two potential trades, first long and then short.
Using the swing trading system I have been working on, SLV is still considered a long as the Trend Channel confirms. Using this layout, there are two potential long stops, one at the Trend Channel at $32.22 on a closing basis and the other using the Swing pivot with a closing candle that has a high that is lower then $32.80.
If you wanted a tight stop, the volatility stop I have incorporated in to the swing layout is at $32.46.
My feeling is a bounce above $34 is probable, but it is also probable that it is a head fake move, which may give you good short positioning, trading it up and then down. If you just waited and there was no bounce, a close below the daily Trend Channel would be worth looking at a short trade.
I know there's a lot there, if you have questions, just email me.
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