Chart Book

Chart of the Day: Silver glitters

PUBLISHED : Friday, 08 July, 2016, 12:14am
UPDATED : Friday, 08 July, 2016, 12:14am

Declining volumes and open interest up to the end of June, coupled with the most overbought situation since the front-month contract peaked in September 2012, make the explosion in Shanghai silver prices over the past six days a little worrying. In good part, the rally can be explained by the break above rectangle consolidation that has dominated since November 2014. The fact that this pattern has been so long in the making, and that the 50-day moving average crossed above the rising 200-day one (known as a golden cross), suggests the start of a new very long-term trend. Yuan weakness will have an impact on the price of this 15-kilogram contract where the first target is 4,622 yuan per kilogram.

Nicole Elliott is a technical analyst