Who would have thought that gold would be down $26, and silver would be up $0.34? Let's take a look at the pattern that has developed in spot silver. Spot silver prices, for the most part, crashed from the mid-March high at $21.40 to the mid-October low at $9.06 (-58%). Let's notice that the October low also coincided with a glaring positive momentum (RSI) divergence, which usually indicates that the power underlying the dominant trend is dissipating -- ahead of a directional reversal. Although it is too early to declare the downtrend complete, both the pattern off of the March high into the October low and the RSI divergence -- not to mention at 58% loss of value -- strongly suggest that silver prices should be in the early stages of a potent recovery rally. My initial target zone is 11.00-11.50, and for ETF traders the ETF is the iShares Silver (SLV)



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.