Sentiment: As bad as in March
The DAX® experienced a fluctuating trading day yesterday with a high-low range of almost 300 points. After all, the German standard values found support in the area of the 200-day line (currently at 12,150 points) and the most recent upward gap (12,133 to 11,968 points). Below this, the various highs and lows at 11,700 / 11,600 points and the 61.8% retracement of the February / March setback (11,679 points) define the next holding area, which has since been recovered since March (currently at 11,690 points). is additionally underpinned. As long as this upward trend is intact, the DAX® will not face any major problems. The latter should also prevent sentiment, because the latest survey by the American Association of Individual Investors (AAII) reveals a clear slump in sentiment among US private investors. The proportion of bulls fell by 9.9 percentage points, almost to the lowest level of the year. The bear camp has grown to almost the same extent. Such a bad mood as in the heyday of the Corona crisis speaks more for the famous “wall of worry”, which the equity markets can climb further in the future.
Possible “hammer” reversal pattern
Regular readers of “Daily Trading” know that we attach great importance to high time levels and long-term charts. With the help of this procedure, exciting chart constellations can often be identified. Although there are still a few trading days until the half-year change, a half-year breakout can already be seen on the underside of the silver price. The March low at $ 11.62 only marks a temporary breach of the lows of just under $ 14 in recent years. The “reversal” on this basis not only ensures a striking fuse, but also a potential “hammer” reversal pattern in a 6-month chart. We have thus adhered to our baseline scenario of a long-term bottoming process since 2014. A rise above the previous year’s high (USD 18.94), which would at the same time break the described “hammer” upwards, would emphasize this basic scenario. The bottoming out of the past few years would have been completed by jumping above the multi-year high of 2016 at USD 21.11. The precious metal is currently receiving tailwind from the seasonality side. Based on data since the beginning of the millennium, the price of silver rose by an average of 5.6% from late June to early September.
Indicators: heralding a turnaround?
It’s not just the turn of the half year that is just around the corner, but also the end of the quarter. Therefore, here is an additional look at the quarterly chart of the silver price, because investors can also take a lot from this price trend. The “false break” described above can be interpreted as a pullback to the former bearish trend since 2011 (see chart). What is also interesting is the fact that the average of the last 38 quarters (currently at $ 20.37) confirms the neck zone of long-term bottoming between $ 19.64 and $ 21.11. The indicator constellation is also exciting: After the MACD has generated a new entry signal, the RSI is also working on a bottom. A successful turnaround in the past has often served as a harbinger of an equivalent exemption in the actual course of the chart. However, the first mentioned MACD also raises hopes in terms of sustainable, lower reversal, because the trend follower is now positioned “long” on a quarterly, monthly and weekly basis.
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