The Silver Miners Exchange Traded Fund symbol SIL looks ripe for a breakout from a Bullish reversal pattern on the Daily chart. This pattern is what I call an "Inverted Head and Double Shoulders pattern" which is highlighted by the blue text notes on the chart below. The neckline is a trendline drawn off the peaks in this pattern and the breakout point signals the potential change in trend.
Notice on the chart below in the blue rectangles on the lower sub-graph the Volume was heavy with the bearish price action when forming the left shoulder of the pattern, and recently we have seen increasing volume when forming the right shoulder with bullish price action. This is what you want to see at this point. Now what is most important will be a breakout through the neckline with another surge in volume.
What concerns me is the fact that I believe the S&P 500 has classic warning signals that the Bull Market is tired and might be coming to an end due to: 1. "Distribution" in Volume; and 2. "Beneath the hood" with the market internals/breadth. Due to the fact that Mining Equities have shown relative weakness to the S&P 500 for some time, they could be taken down hard with any correction in the S&P 500. In that case I would prefer to see relative strength in the Miners so that the next breakout of a bullish pricing pattern in SIL would be an absolute no-brainer.
If there are signals to exit the position in SIL after entry so be it. The reward to risk ratio in terms of the key reference areas provided in the chart analysis and the probabilities for a change in trend are extremely valid at this time in my strongest opinion. If a position needs to be exited it can always be re-entered with any future breakouts above resistance or with a new bullish reversal pattern that develops. The bottom line is success comes down to not just "Entry" but "Money Management/Position Sizing", "Investment Management", and "Risk Management".
My most recent articles on Goldseek.com are on the US Dollar Index and Silver and they can be found here and here. Some of the comments are worth looking back upon. Comments are always welcome.
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