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Silver May Revisit 2008 High After Pennant Breakout: Technical Analysis
Silver may rally to $21.35 an ounce after completing a so-called pennant formation, according to Barclays Capital.
Silver for immediate delivery rose above $19.47 this week, breaking out of a narrow trading range that began in May and capped prices below $20, said MacNeil Curry, a technical analyst at Barclays in New York. The breakout means that silver will resume a bull trend that began in October 2008, he said. A gain to $21.35 would be the highest price since March 17, 2008.
A pennant is formed when upper and lower trend lines intersect to form a triangle. If a security gains above the trend line, it is seen as a bullish sign. The upper-resistance line was established when silver climbed to about $19.47 in June.
“Pennant patterns tend to be continuation patterns,” Curry said. “This breakout confirms the previous bull trend.”
Silver for immediate delivery added 6.37 cents, or 0.3 percent, to $19.7125 an ounce at 11:26 a.m. in New York. Before today, the metal gained 16 percent this year.
The price touched $8.46 an ounce on Oct. 28, 2008, before rallying 48 percent in 2009.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
To contact the reporters on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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