First, the bad news for our silver bug enthusiast friends: Silver’s early-March false breakout last month was a cruel tease for patient traders who had been looking for a legitimate breakout to trade. As you can see below on the zoomed-out weekly chart of SLV, silver has worked through a falling channel for nearly a year now. The attempted breakout fell back inside the channel just as quickly as it tried to leave it in the dust. Respecting stop-losses and wiping the slate clean was the only saving grace for eager bulls who levered up at the site of a breakout.
Now, the better news: The false breakout did not lead to a high selling volume breakdown lower. Instead, price merely fell back inside the channel, and selling volume on SLV has started to taper off. Thus, silver still needs more time to consolidate before I would see an edge for a directional trade. Note, however, that the major 2010 breakout remains intact, giving the bulls the longer-term advantage.
The 2011 run up in silver was a rare and dramatic one. An extended period of consolidation after it was to be expected. At some point, we will get the true breakout. For now, though, silver is out of fashion and not offering much to chew on for swing traders looking for a meaty move, either way.