While the price of silver continues to languish, an excellent contrarian signal has emerged.
After silver's recent foray into correction territory, the metal remains there after bouncing back only slightly.
Meanwhile, silver futures positions held are rapidly approaching levels that in the past have marked the start of strong rallies higher.
This week, traders are awaiting the results of the latest FOMC meeting. No rate hikes are expected at this latest sit-down, but a surprise hike would likely weigh pretty heavily on silver prices.
Observers will closely dissect the Fed's language for clues as to whether any changes are expected to the forecasted two more rate hikes this year.
As well, many will look for any influence Trump's criticism - that Fed rate hikes are hurting the economy - could have on the Fed's outlook.
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So the next few days just might mark an inflection point for the future of silver prices.
Before I show you my latest silver price prediction, here's how prices are trending this week...
What's Moving the Price of Silver This Week
Silver's trading has been pretty uneventful since last Tuesday, July 24.
The metal remained in a quiet trading range between $15.30 and $15.60 as the U.S. dollar index (DXY) was equally limited. For its part, the DXY bounced between 94.80 last Tuesday, backed off to a low of 94.10 late Wednesday, then climbed to peak again at 94.88 early on Friday.
Here's a look at the DXY's recent action:
By Monday afternoon, the DXY had sold off to 94.35, but that was little help for silver prices.
By then silver was right in the middle of its past week's trading range, changing hands at $15.46.
Now here's where I see the price of silver heading from here...
Here's What I See for the Price of Silver Now
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First, let's look at silver's biggest near-term nemesis, the U.S. dollar.
We're finally getting price action to confirm what both the relative strength index (RSI) and moving average convergence divergence (MACD) momentum indicators have been telling us since late May. They're suggesting that strength is waning, and the dollar looks increasingly like it has topped out.
The mid-July top just below 95 is a lower high than back at the end of June. If we keep getting lower highs, that will be another sign of downward momentum.
Silver's price action since testing the low of July last year may not be spectacular, but it is encouraging.
We've seen it bounce off that low near $15.40, and both the RSI and MACD have flipped and turned higher.
If the dollar continues to weaken and seasonal trends play out, these two factors could help silver turn higher.
But here's perhaps what we need to finally mark a bottom in precious metals prices.
According to Jason Goepfert's Sentimentrader.com, sentiment on gold, silver, and platinum as a group is near the worst levels in the past decade. And if sentiment for the three metals is averaged, it's among the worst levels in almost 30 years.
As Jason's research has indicated, "When combined sentiment was this poor, the best performances occurred over the next three months. Silver was one of the biggest beneficiaries..."
Indeed, according to Jason, over the next three months, silver was up an average of 7.7%.
If we add in the fact that gold and silver tend to do well seasonally at this time of year, I think silver could surprise to the upside, perhaps touching $16.30 within weeks. By late summer, it could even overtake its high this year of $17.25.
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