Another Day in the Life of a Silver Rally

After a strong showing last week, silver has developed an inverted head and shoulders pattern, after breaking out if a short term down trend.  Possible retracements are at $41.10 and $43.15 for the week with $38.00 holding the floor.  Daily RSI close to overheated, but the weekly RSI is showing a strong crawl to the upside. 

As I write this we sit at $39.77 per ounce.  We will see how this test of $40 goes, a lot of long interest has poured into the NY Globex upon open and has put silver up over 1% in the early action.  With the 200 day moving average sitting at the resistance built by our most recent consolidation and the 200 day MA is still rising.  After the 100 day MA and 50 day MA converged (July 6-7), the inverted head and shoulders pattern was formed, I feel we are going to have another good week in silver.  The shorts have a hard fight ahead and I see a test of $42 this week as a crucial moment in the paradigm shift occurring in the minds of managed money... high precious metals prices are here to stay.  The crash was short lived and as I said before, a mere short term price aberration.  


Long term, we will pass $50.00/oz on the way to $75.00/oz on the way to $125/oz, this may come quicker than expected.  Though I have finished scaling into my SLV options strategy, I am interested in this price action stabilizing itself before taking further action.  Should be interesting.