Shares of the iShares Silver Trust (NYSE:SLV) and the ETFS Physical Silver Shares (NYSE:SIVR) are both lower by about 2.1 percent in late trading Tuesday, making for a good day for the ProShares UltraShort Silver (NYSE:ZSL).
The always volatile ZSL is up more than four percent and the leveraged ETF's chart is starting to look attractive. After a recent double bottom in the $40 area, ZSL is trading above $46.50 at this writing and could run another eight percent to 10 percent before more resistance.
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Not surprisingly, when ZSL's chart perks up, there is usually a reason and it is usually a bad one for the likes of SLV and SIVR. As Kimble Charting Solutions points out SLV is having difficulty cracking a key Fibonacci retracement area. In this case, the 38.2 percent retracement zone.
In terms of price, SLV's current resistance area is the $33-34 neighborhood. The problem is SLV is now at risk of falling below its 200-day moving average at $30.
The "38% Fib retracement level continues to be strong resistance as SLV remains inside of its falling channel," according to Kimble.
Noteworthy is the fact that SLV's volume today is almost 5 million shares north of the daily average with more than an hour left in the session. ZSL's volume has eclipsed the daily average by more than 10 percent.
Fibonacci ratios and retracements are derived from the Fibonacci sequence named for the Italian mathematician Leonardo Fibonacci. Fibonacci is used by many technical analysts as a way of spotting key support and resistance areas for a variety of securities.
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