The recent rally in precious metals has lifted SLV as much as 28% from its December 2011 low of $25.65 to close near $33 on Friday, January 27, 2012. This closing price is $1.50 below a triple resistance area.
The important triple resistance area is defined by the intersection of the down-trendline TL and the horizontal line HR near $34.44 and the 200-day simple moving average of closing prices at $34.81. SLV prices must break and stay above this resistance area before another bull market can commence.
The triple resistance may cause increased volatility. I suspect there are also many participants who averaged down after last April’s fall and are looking for levels to get out. I would be very surprised if this turned out to be an easy ride. But again, I have been wrong before…
Disclosure: no relevant positions.