I've been think bearish on precious metals for the past few months, (as seen here), but I think the basing pattern we've seen recently indicates that metals could rally further. I went long AGQ (2x bullish silver ETF) today with a stop at $40.05. My target is $60-65, but if things pick up very fast in the next week or two, I will hold longer and trail my stop.
The daily chart of AGQ shows a beautiful cup and handle basing pattern. Notice the decreasing volume on the downswing, and the expanding volume (especially on the up-days) on the upswing. Then, there was decreased volume during the handle. Finally, price has broken out to the upside on above-average volume. This is a very bullish pattern and implies much higher prices for silver
The chart above shows the COT data for silver. The blue line is the 78-week index for commercial traders. As you can see, this indicator has been quite accurate for catching tops and bottoms. Currently, when silver was bottoming around 1200 (12/oz), the COT index reached close to 100. This indicates that silver is likely getting ready to explode higher.