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May 9: Since the precipitous drop down to $11.64, we have been watching for new trends to develop in silver. Demand for silver has a large industrial component, so it follows that with global industry in a slump that the price of silver would be subdued.

In the silver futures chart above we can see that the first useful fibonacci extension trade formed from the 11.64, 14.98, 13.90 pattern. This gives confidence that we can now search for more tradeable patterns to develop.

The one we are watching now is noted on the chart. There have been three attempts to cross the trigger point at 15.73 shown by the green line. On Friday the line was decisively exceeded with a close of 15.78.

On the negative side, the Ultimate Oscillator is still pointing downward. This is a warning that it could still be too soon to buy.

Intrepid traders could buy, but keep tight stops. See our article on methods for trading using fibonacci extensions.

We don’t like the risk with futures trading, so we prefer to use ETFs instead. SLV is very liquid for short term trading while PSLV is more secure for long term trades or investing in our opinion.