Silver price has been very exciting in the past 12 months. If you look at the below chart, you can see that within a short period of time, silver price has shoot up to USD 49 and felt down to USD 27. If an investor unfortunately bought silver at USD 49, he would probably get a heart attack when silver price hit USD 27. That is 45% price drop!
What can you tell from the above chart? If you are like most people (including myself), this chart doesn’t seem very interesting. However, I met a new friend from Facebook and he has pointed out something very interesting from this chart and I have decided to share it here. Look, this is what he has shown me:
Silver price seems like consistently not able to break several major resistant levels. Resistance level is where the price tends to find resistance as it is going up. This means the price is more likely to “bounce” down this level rather than break through it.
By looking at the chart, it silver price is potentially not able to break the current resistance level like how it happen during May 2011 and Sept 2011. It seems the possibility of silver price going down is higher than the possibility of silver price going up. However, if silver price is able to break this resistance level, the price might shoot up significantly.
So what can you do with this information? Well, if you believe silver price is not going to break this resistance level, you should not buy any silver in the next few days and wait for silver price to significantly go down before buying. On the other hand, if you do not believe in this trend and believe silver price will break this resistance level, you should buy now before the price shoot higher.
Time will tell whether silver price will go up or go down. In the mean time, where do you think silver price is going?