Weekend Update - Silver
In Silver the volume has barely been 40,000 contracts lately on the daily chart, and "Open Interest" is around 120,000 contracts. Those traders who currently have a big position in Silver have a "ruling" hand right now. Should large orders "at the market" come in to cover shorts, or liquidate long positions it is likely to cause violent price action out of nowhere. Volume has been anemic off the breakout in my opinion. While silver is breaking out of a very tight pattern on the daily chart, (see right hand side below), the dominant pattern on the daily chart makes this one look miniscule in the grand scheme of things. I don't believe there is a reason for the bulls to pop the champagne corks just yet.
I am bullish as long as silver stays above the breakout point, and I would say that initial support is the apex of that triangle pattern around $27.00, but silver is by no means "out of the woods" in my opinion. I would be super conservative day trading silver going into next week the way things stand as I write this.
It looks to me like $29.90 is the next level of strong resistance.
There is not much to talk about as far as changes in trader positions in the latest Commitments of Traders report, but one thing I think is worth mentioning is "Open Interest" in the weekly COT report has increased 11 out of the last 15 weeks for a total increase of 9,192 contracts. There is some stealth positioning considering the recent range trade and low volume, and the big question is who has the strong hands in this fresh open interest?
(Click on chart to expand)
My most recent post in silver can be found here: http://scottpluschau.blogspot.com/2012/07/silver-is-looking-over-edge.html
I do my best to tweet out my posts promptly on twitter/ScottPluschau