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I wanted to demonstrate how peculiar that silver has been acting lately relative to it’s past behaviour. This chart is rather small and you have to click on it to make it bigger, but it needed to be this size to have a large enough sample size and previous trends to make my point that silver’s behaviour is not indicative of a bullish breakout that is sustainable given it’s parabolic move over the last 4 months.
The top part of the chart is the BPGDM (bullish percent gold miners index) using the Renko view and I chose this particular indicator because they don’t have one that’s exclusive for silver, but gold and silver for the most part move in tandem to make this study relevant. The bottom part of the chart is the chart for physical silver.
If you look at all the non colored boxes you’ll see that when this index tops and begins a downward move, the physical metal follows it by either moving sideways or down. That is normal and how the metal should behave during a correction.
But if you look at the boxes I’ve colored for the last 2 correction cycles you’ll see that the physical metal moved higher both time, and the larger non colored box shows a clear negative divergence that is extremely pronounced.Essentially silver has just refused to go down in the face of obvious distribution in the bullish percent index. To make matters even more bearish, we also have a lower high that has taken place with this recent mini-move lower. … [visit site to read more]
