SIH10

Silver's pullback has been impressively shallow so far, considering the steep pitch of the rally over the last five days. A minor midpoint support lies at 18.485, but if it's breached, brace for more corrective action over the near term down to as low as 18.290. Alternatively, a renewed surge today that exceeds 18.990 would be extremely bullish.  You can look for a camouflage entry opportunity if there's a pullback from within 2-5 ticks above that threshold.

March Silver has already blown past the Fibonacci resistance noted in today's Gold tout and looks headed for a Hidden Pivot resistance at 18.965, at least. It would take a little more than that, however -- specifically, a push exceeding the 18.990 peak recorded December 4 on the way down -- to refresh the bullish impulse.  At that point, odds would favor a further run-up to at least 19.985, the target of a pattern (180-min) begun from 16.280 on November 3.

Silver is tracing out a down-pattern similar to the one in Gold Thursday night, but there are subtle differences enough to suggest that a Hidden Pivot at 17.990 can be bottom-fished with a very tight stop-loss. Mainly, it is a matter of using the one-off 'A' at 18.280 (15m) to neutralize the sausage quality of the point 'B'.   Notice that this impulse leg, with 18.085 as 'B', exceeds the required internal and external lows.

The futures are playing cat-and-mouse Wednesday tonight, feinting sharply higher, then pulling back even more sharply. The important thing to consider is that the peak of the head-fake took out a cluster of highs made on the way down a month ago, creating an impulse leg with bullish implications that will remain intact unless this sell-off dips below 17.770.

Silver faces some challenging peaks analagous to the four that February Gold will need to surpass this week to begin 2010 with a bang.  The topmost  lies at 18.385, implying a move of about 4% from these levels.  I've included a chart that contains a stochastic hint that all will turn out well for the bulls.  The divergence between falling price bottoms and rising stochastic bottoms is quite constructive and suggests that buyers will be lusting for more in the days ahead.

My worst-case target for the next 7-10 days is 16.325, the Hidden Pivot 'D' of the pattern shown in the chart. It is corroborated by the 16.330 target of a lesser pattern, also shown. These two numbers can be expected to exert magnetic force on the futures in the days ahead, bringing them down to a high-odds spot for bottom-fishing. It should be considered a minimum downside objective for the time being, subject to change if the point 'C' of either pattern is exceeded to the upside.

Friday's thrust was encouragingly impulsive on the hourly chart even if it didn't quite reach the 17.605 threshold I'd flagged. That seems likely to happen today, but we'll raise the bar somewhat, to  17.915, to determine whether the rally is the real deal or just a titillation. A move past that last number would breach two external peaks on the hourly chart, the second of which occurred on December 9.

Someone in the chat room mentioned the prospect of Silver leading Gold in the next rally cycle.  I won't quote odds on this bet, but I am pretty confident about where March Silver is headed over the next 4-6 days if it closes below 17.070 for the week:  to 16.325, a Hidden Pivot extrapolated from the nice pattern shown in the chart. That would be a back-up-the-truck buying opportunity were it not for the pivot's close proximity to some supportive lows recorded in late October and early November. But it is a buy-able pivot nonetheless, as well as my minimum downside target for the near term.  Please note that the odds of a further correction would be significantly diminished, and bulls returned to parity if not immediate dominance, if 17.605 is exceeded today.

Dueling impulse legs on the intraday charts constitute a mixed signal that makes Silver look slightly more bullish than gold at the moment. We can use a Hidden Pivot at 16.800 as a minimum downside target for now  while stipulating that it will take a pop today or tomorrow to at least 17.915 or better to turn the lesser charts unambiguously bullish.