After Bernanke left the possibility of QE3 open in yesterday’s scheduled testimony, commodity prices rose. QE2 can be attributed to the rise in commodity prices for most of the first half of this year.
- Silver as seen in the 4H chart had a double bottom, a throwback test the 35.10 pivot, respected it after a temporary break, and is now rallying sharply.
- The RSI shows bullish momentum confirmation.
- The daily chart shows the market 1) still above the 200SMA, 2) had failed to establish bearish momentum as the RSI remained above 30, 3) RSI breaking 60 suggests further a lack of bearish momentum, with a break above 70 pending to give bullish momentum confirmation in the medium-long term, 4) attempting to form a double bottom with a pending break above 36.60.
- A double bottom breakout projection targets 45.85, near the 78.6% retracement of the sharp slide in the end of April-beginning of May.
- A less aggressive bullish target would be the 43.00 level, near 61.8% retracement. The more aggressive target is the 2011 high of 49.85.
- This bullish scenario would not look good if the market returns below 36.80.
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Fan Yang CMT
Chief Technical Strategist
FXTimes
