Like gold, silver now appears to be completing an intermediate Head-and-Shoulders top within a much larger and very bullish Head-and-Shoulders bottom pattern. Both these Head-and-Shoulders tops are related to the Head-and-Shoulders bottom completing in the dollar index, that we look at in the parallel Good Market update.

On silver’s latest 6-month chart we can see how the gap breakout out of the small Falling Wedge downtrend over a week ago did not lead to follow through, and instead the price has moved to complete the Right Shoulder of the now clearly discernable Head-and-Shoulders top that has been forming since the beginning of August. It should now descend to the “neckline” of the pattern before proceeding to break down below it and drop into the broad band of support shown as the dollar index ascends to its target in the 97 area, where silver should bottom out and turn up again as the dollar reverses to the downside having hit its target.

Although silver’s recent COT charts cannot be described as bullish, they have looked better than those for gold, but this past week, unlike gold’s, they took a turn for the worse. There is plenty of room for improvement here, which will be occasioned by silver breaking lower and dropping to the $16 area on a dollar rally.

http://silverseek.com/commentary/sil...t-update-16918