Silver is breaking out by moving through the top of a massive base (Figure 1). This base has been forming since September. In a fast-moving commodity like Silver, three months is a long time to make a base. There is a reason why that is important.
There is a saying in technical analysis: “The bigger the base, the higher Into space.” The phrase implies that the longer an instrument “bases,” the bigger the ensuing move can be. In this case, the theory could propel silver much higher.
The silver breakout seems to confirm that the U.S. dollar has topped. A decline in the U.S dollar benefits Bitcoin (BTC) and the entire crypto space. In addition, silver is an important leading indicator of the precious metals space. Historically, we observed that every big rally in gold starts with an up move in Silver.
Speaking of gold, the chart of gold (GLD) is confirming this thesis. Gold (GLD) is breaking out above an important Fibonacci speed resistance line near 120 (Figure 2).
So, there is a silver lining to the Christmas decline in Bitcoin (BTC). Any rally in precious metals could put a floor underneath Bitcoin (BTC).
The Christmas decline in Bitcoin (BTC) also validates our trading desk’s thinking that FOMO was not a good strategy for catching a future Bitcoin (BTC) rally.
Bottom Line: Kudos to our traders for seeing that there would be a dip to potentially get involved in a future Bitcoin (BTC) rally. I’m glad I listened to them. Join me as I continue to benefit from the Crypto.IQ trading room. We all need to see the Bitcoin (BTC) chart with a sense of clarity and avoid both FOMO and FUD.