We write about gold a fair bit here at Market Minute.
Just last week, Jeff Clark wrote:
“Gold stocks are about to explode higher.
The price chart looks amazing. The fundamentals are all lining up.”
Since then, the Vaneck Gold Miners ETF (GDX) is up nearly 10%.
But today, I want to share an opportunity in a different precious metal…
At the beginning of my career, I traded a nine-figure precious metals and currencies managed account for a small group of ultra-high-net-worth investors.
Much of my focus was on gold during this time, but we also traded significant volume in the silver, palladium, and platinum markets.
Recently, I caught up with one of my old trading partners from that fund. As the conversation veered to the markets (inevitable, right?), we realized that we’d both spotted the same setup in silver.
This is a trade with huge upside potential.
So, let me walk you through the opportunity on the chart below.
Silver is tracing out a very bullish chart pattern. Prices have recently broken above a cluster of key moving averages.
The first thing to pay attention to on this chart is the breakout above the 20-, 50-, and 200-period moving averages.
This kind of breakout is a very strong sign of intent by the bulls. The three moving averages indicate the direction of the short-, intermediate-, and long-term trends.
Breaking above all three moving averages clears the way for a much larger move to the upside.
The second important feature of this chart is the larger triangle pattern (blue lines) that silver has been trading in. This triangle has been containing prices since early 2021.
But this chart pattern is a pressure cooker. As prices move up and down within the pattern, the pressure builds.
Prices eventually make their way to a point where the trendlines of the pattern cross.
That’s when the pressure releases. We’re almost there.
See, triangles are typically trend continuation patterns. That means the pressure almost always releases in the direction of the larger underlying trend.
In the case of silver, the larger trend is bullish.
Let’s take another look at the chart above…
Notice the big runup in prices from the lows of 2020 to the highs of early 2021.
This kind of movement is part of the trending phase of the market. After the trending phase is complete, one of two things will happen…
The first possibility is that the trend will reverse entirely. The second is that prices will either pull back or consolidate in a sideways pattern.
In this case, the triangular shape of the price action since February 2021 makes it clear that we’re seeing a bull market pullback.
And if prices can break out above the resistance line of the pattern, that provides even more evidence to suggest that the price of silver could surge.
My target for this pattern is around $35. That would bring silver back to where it was trading in October 2012.
Now seems like a good time to load up on silver.
Happy trading,
Imre Gams
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Source: Jeff Clark Trader