Updated chart on Silver (H&S)

This is a follow up on yesterday's post where I identified a potential bearish "Head and Shoulders" pattern on the daily chart in silver:

http://scottpluschau.blogspot.com/2012/03/silver-approaching-neckline-of-head-and.html

I didn't have enough time to tweet out the post or send it in stocktwits prior to the neckine break. For those of you who have twitter, usually all my posts are tweeted promptly afterward.

From my auction market analysis standpoint, the bears are weak. The retake of the neckline happened pretty quickly which is a sign that the market "currently" believes that silver is undervalued. Bulls definitely needed that save, although it did happen in the overnight. Let's see what takes place when the pits open at the Comex in less than a half hour as a I write this.

If this recent low from yesterday around $31.62 fails today, I would be looking to short silver with the right pattern.

If this minor support area holds today, and that right shoulder around $34.50 then gets taken back, the shorts should be on the run. Failed patterns are very strong signals.

It is in my opinion that the H&S hasn't failed until the right shoulder is taken out. But in the meantime, I also have no issues going long above $32.50 if the right pattern presents itself due to the fact that there was no follow through on that breakdown which does set up a potential squeeze to the right shoulder target, where stops may be clustered.

It is a time to be extra cautious in silver otherwise. Let the market lead or show us the way.

(Click on chart to expand)

ScottPluschau