I want to thank Charlie for letting me know that I had forgotten to refresh the comments on the 4 hour chart from the other day.
Here is a new, improved version!
Below is a weekly chart of silver employing the Directional Movement Indicator, which is a favorite of mine for determining whether or not a market is in a trending fashion or is just chopping or consolidating.
The line in black, the ADX, will rise if a market is trending. It can be a bit confusing but this line will actually rise if a market is moving lower also, as long as it is a trending move lower.
Generally speaking, when the ADX line turns down, the trend has been interrupted and longs or shorts will want to close out positions at that point and then wait to see what is going to happen next.
By noting the directional lines, the blue and the red, one can then see in which direction the market is pushing.
If the market is moving upward and the trend is higher, both the positive directional movement line and the ADX will be rising in unison. At that time, the negative directional movement line, the red line, will be moving down.
If a market is in a distinct downtrend, the red line will be rising along side of the ADX or black line with the positive directional movement line (the blue line) moving lower.
When the market is not trending, the ADX will be moving lower while one of the directional movement lines will be rising and the other falling depending on where the short term direction is leading.
What looks very promising on this chart is that it is a weekly chart and the ADX has resumed its upward turn which is suggesting a new leg higher as the market is back to trending, in this case, picking up where it left off a few weeks back when the market topped.
Keep an eye on the blue line. Ideally we want to see it surpass the peak from the previous high in price.
There will be more on this as time progresses and we get a chance to see how things play out.
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