Chart to keep an eye on - Silver

Silver is showing some congestion in the daily timeframe around the neckline of a "Head and Shoulders" pattern that has yet to be fulfilled. This congestion is forming what resembles a "Diamond" pattern. Diamonds can be either continuation patterns or reversal patterns in my experience. I think it is pointless to "predict" a direction in here. A breakout or a breakdown on a surge in volume from these converging trendlines is something to keep an eye on in my opinion.

The longer it takes for there to be a strong move lower below the neckline in the "Head and Shoulders" pattern, the more tension that builds in the open interest and for those on the sidelines. Some bears begin to have doubts and the bulls gain more confidence which results in a diamond pattern of increasing volatility and whipsaw.

(Click on chart to expand)

(I have recently developed my own proprietary indicator in both gold and silver for the weekly timeframe that covers changes in the COT report, Open Interest, Volume, Price, and the Profile of the Auction. Details to come.)