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As I am seeking to Trade Silver rather than Gold I though I would open a specific Silver thread and cross reference to the Gold thread rather than post both on the same thread.  To open this one I am going to go back to the long term set up before looking at the current situation.  As IG do not hold very long term price data, and I like to have the whole picture, I am using long term charts from  Macrotrends.net.  If you haven't been on this website and like to see long term charts you should check them out on the following website address (note you can also download data, which I do to set up correlation graph analysis, often to debunk received wisdom such as Gold/Silver rise or fall contra to USD).

www.macrotrends.net

If you look at both the inflation adjusted and unadjusted (untick the log option) this simply puts an effective market floor around about $5.00.  We aren't that far off this now.  You will also note, from the unadjusted chart, that the whole market has posted a series of higher highs and higher lows, FWIW.

https://www.macrotrends.net/1470/historical-silver-prices-100-year-chart

I have a Quarterly chart that shows an expanding Triangle (some call a megaphone) since the late 1970s (around the time of the Bretton Woods removal of the USD from the Gold standard triggers a period of run away asset price inflation through runaway debt creation of money/liquidity).  This chart shows Silver to be at a critical juncture right now.  A drop through the long term supporting trend line suggests a drop to the market floor ($5.00).  A bounce and breakout of overhead resistance suggest a rally, possibly to new all time highs.  The expanding triangle might suggest that high could be in the $65.00 level, which would be consistent with a 1-5 long term bullish wave profile (there are some alternative EWT structures but as they all point to the same end I wont bother recounting them all).  Additionally, if there is to be a deflationary depression and as the market crash that precipitated the last one (1929) took about 3 years to conclude the top of this market could (big could there of course!) be in 2022.  But that is all just conjecture and not important at this point except to point out the potential for any risk reward calc.  

[See below chart for next level analysis]

XAGUSD-Quarterly_070619.thumb.png.4307f313b45f180b6981713944c3bad5.png

Looking at the Monthly chart, we can see the supporting trend line in more details with a lot of strong touches and prior pivots, which makes this a crucial line of support.  The price action since Dec 2015 has been contained in a narrowing channel (or consolidation Triangle), which is fast running out of road, a breakout ought, therefore, to be imminent.  There has been a strong case for a double bottom recently at 2 (purple) although alternatively this could all be an A-B-C retrace, but we don't have to worry about that for some time to come as both scenarios point in the same direction (i.e. up).  Only a breakout of the Triangle to the down side negates a rally scenario.  Very strong Positive Momentum Divergence (PMD) at the wave 3/C turning point in Dec 2015 set up the end of the prior Bear market (this is a trend change signal for me).

[See below chart for next level analysis]

XAGUSD-Monthly_070619.thumb.png.f3815b3522c6dc8d5c61483677229dab.png

Next up is the Weekly Chart and here we can see that consolidation in a bit more detail.  The price action conforms to a so-called complex retrace pattern with a lot of whipsaw action but essentially still an A-B-C retrace to wave 2 (Purple) and that double bottom.  That was followed by a rally to wave 1 (blue) and a potential turn at wave 2 (Blue) (see Daily chart for more detail).  Again there was strong PMD at wave 2 (Purple).  It is also noteworthy that the non commercials (or Financials) have consistently got the turns wrong during the consolidation (and before as it happens).  This is a contrarian dream.  The people who know these markets best are the precious metal specialists, i.e. the miners and refiners (so-called Commercials).  They are the ones with the inside information on true supply and demand and the state of the industry.  I always bet with the Commercials on Silver and Gold.  Recently the Non Commercials turned very (relatively) Bearish, just as Silver bounced off critical support and rallied away.  Was that the turn?  Not sure at this point, let's take a closer look at the Daily chart.

 [See below chart for next level analysis]

XAGUSD-Weekly_070619.thumb.png.ebde6548217b5ba07b871e0f15129d44.png

On the Daily you can the recent price action more clearly.  The potential wave 1 (pink) rally off the Wave 2 (purple) double bottom turn has turned down again into another retrace.  There was NMD at wave 1 (pink) after a 1-5 form rally.  I was therefore looking for an A-B-C retrace move to set up a much stronger rally that would carry through key resistance.  So far we have had an A-B-C to wave C (blue), with a good EWT internal form on all legs and PMD on the wave C (blue) turn.  Additionally this turn occurred at Fib 76/78% and a possible short term Head & Shoulders neckline but just short of a retest of that long term trend line.  Price has rallied up in a 1-5 form wave to the current point (wave 1 - green) and is stalled at overhead resistance and a parallel channel line.  As with Gold we have a couple of pin bar rejections off resistance.  At this point I would not be surprised to see a bearish phase but will it be a retrace to a higher low or a retest of that long term trend-line?  Who knows?

There are frustratingly at least 4 scenarios at this point, but only 1 Bearish long term, as follows:

  1. The market punches through the overhead resistance (Gold may be a good early indicator for this - see my Gold thread)
  2. The market does retrace to put in a small A-B-C to wave 2 (green) and then the rally really gets going.
  3. Another leg down to wave 2 (blue - repositioned) for a test of the LT trend line before that rally
  4. Bear breakout.

Finally, let's look at the short term chart. [See below chart for next level analysis]

XAGUSD-Daily_070619png.thumb.png.082c4c2258fe6051b981f5a20651c6b0.png

On the 1 hour chart then I have a possible wave 1 (green) rally off the wave 2 (Pink) turn (same as Wave C blue).   The form is a good 1-5, little chance of this being an A-B-C but you can never fully rule it out.  Pin bar rejection off near term resistance and small A-B (brown).  If this is all correct then the next phase should be down to retest support at 1450 or 1440 and then we will see what happens next.  As with Gold, a break above the near term resistance (1510) suggest the rally is on. 

XAGUSD-1-hour_070619.thumb.png.bd817a70e4832d90854796087b594fa5.png

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Silver , as seen in my chart, has reacted reasonably well to the fib levels.  I guess people will now be looking for a break below that blue zone or above that yellow trend line. I have noticed that the Gold:Silver ratio is historically very high & maybe that may either pause or reverse

Capture silver.PNG

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Hasn't the gold:silver ratio been high since the 19th century?  Silver hasn't been a money of account for centuries now.  Gold is where it's at as a store of value.

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Just now on twitter

Capture silver.PNG

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The reason Silver is more attractive than Gold to me is twofold:

  1. It has not rallied as hard as Gold of late so offers more short term upside and less downside risk than Gold, relatively.
  2. In the past Silver has been seen similar moves to Gold but in a more amplified way.  If you look at the 2011 commodities peak your will see that while Gold made nearly 700% gains Silver made 1100%.

Maybe it is my Spidey-sense but I remain unconvinced we have seen a true breakout on either, despite recent higher highs.  The rallies have been straight up, I will need to see a pull back or a breakout of a significant level, neither of which we have seen yet.

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Spidey-sense seems to be working.  Silver has put in a decent Bearish drop, Gold also but less impressive.  However now we are getting a potential reversal into a rally.  There is PMD; and credible 1-5 wave pattern down to the turn (probably wave A) followed by a small 1-2 and rally.  There is an unclosed gap around about a retest of the previous channel breakout zone.  I am expecting a strong rally in wave B (opposite to that I see on stocks!) before another bearish move to finish off the retrace.  Gold should do something similar.

 

 XAGUSD-1-hour_110619.thumb.png.a04040479883cef885f4d12dbe9e1481.png

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net long speculative positions near lows

Capture silver.PNG

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Silver is similar to Gold, unsurprisingly, except that it has not posted a higher high but is currently shaping up for a retrace conclusion in wave C.  This would a fast move down from here.  However, as with Gold, we may yet see a reversal and higher high, with a test of a potential Flag line or longer term Weekly resistance trend line to send the market back down.

As with gold, there are too many scenarios for me to take a trade at this point.  I will wait for either a firm break out of overhead resistance or a retest of lower Support to get Long.

XAGUSD-Daily_150619.thumb.png.c94f9eceb1df84ccf97d4fde0f5ffb09.png

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On 12/06/2019 at 16:54, elle said:

net long speculative positions near lows

Capture silver.PNG

 

Could you provide the source of this info?  Thanks ...

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Posted (edited)
On 07/06/2019 at 16:50, Mercury said:

The reason Silver is more attractive than Gold to me is twofold:

  1. It has not rallied as hard as Gold of late so offers more short term upside and less downside risk than Gold, relatively.
  2. In the past Silver has been seen similar moves to Gold but in a more amplified way.  If you look at the 2011 commodities peak your will see that while Gold made nearly 700% gains Silver made 1100%.

Maybe it is my Spidey-sense but I remain unconvinced we have seen a true breakout on either, despite recent higher highs.  The rallies have been straight up, I will need to see a pull back or a breakout of a significant level, neither of which we have seen yet.

 

Do you now think there has been a true breakout for gold?  This supposed 'long overdue retracement' sure is becoming long overdue.

Edited by dmedin

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Check out my Gold thread posts for what I think about Gold.  Don't know what you are referring to WRT a long overdue retracement (I assume you mean on Gold).

With respect to Silver, and I have no reason to expect any material directional divergence between Gold and Silver at this time, I don't see a material breakout yet.  I would want to see a break of 1540ish (the first weekly trend-line.  However the crucial breakout point for Silver is the long term resistance trend-line up around 1700ish at this point (see initial posts on this thread for my analysis on this).  My view, as expressed in the previous post herewith, is that there is another leg down of some sort on Silver BUT if I am wrong on that then the 1540 breakout may be a Long event.  However I would also want to see congruence with Gold, maybe also Platinum, and a fundamentals case for a strong and long term sustainable rally on precious metals generally, and I don't think we are there yet on that.

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There is a lot of big talk about precious metal rallies of late and no wonder given the strong recent rallies.  But markets don't move in straight lines and when there is too much one way traffic (inc rhetoric) a reversal is often on the cards, unless we are in a financial meltdown and Gold/Silver are flight to safety assets - are we there yet?   I don't see it, even though I want to...  Therefore the odds favour a Bull trap.

I am long term bullish Gold/Silver, just read back over my 2 threads and you will see that clearly.  Silver is my preferred vehicle.  However I have a nagging sense that this is not the moment.

On my chart below you can see my road map scenarios, which are as follows (see my Gold thread for the equivalent Gold chart):

  1. We remain in a complex form retrace whereby the market will travel down within the narrowing channel encompassed by the upper weekly chart resistance trend line (Purple) and the lower H&S neckline (blue).  Oscillators are well over bought and we have just had a strong rejection off resistance and that trend line, unconfirmed as the day/week has not closed yet.  The price action does fit an A-B-C concluded at 1440 (Blue labels), which would suggest a strong wave 3 rally, hence the excitement perhaps, but this could also be a larger wave A-B (red labels) that suggests a Pink 2 retrace conclusion would occur around 1420 at the confluence of the H&S neckline, the supporting LT monthly chart trend line and a Fib 88%.  Very compelling BUT this fits my bias so watch out for that (note to self!)
  2. Alternatively we could see a short retrace and rally to break through resistance and beyond.  This scenario is not strong on Silver from a technical perspective but can be seen better on Gold as a retest of near term breakout zones.

I would not be looking to trade Long until I see these 2 scenarios resolve.  There are other better trades than a quite risky Short here as well so I will sit on the sidelines and continue to monitor price action both here and in other related markets until more indicators click into place.

XAGUSD-Daily_210619.thumb.png.3a03a594c824a02b7235d93381d61389.png

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PS: there is just one thing, what if US large Caps fail to make fresh all time highs...?

☠️

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28 minutes ago, Mercury said:

PS: there is just one thing, what if US large Caps fail to make fresh all time highs...?

☠️

are they not already tho? 

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Actually you are right @cryptotrader on SP500 at least, it looks like a technical ATH by 0.20.  Could still stall and put in a double top with others staying below as a retrace but I wouldn't bet the house on it or anything.  My combined lead scenarios: USD down; Gold/Silver Down; Copper Up; Oil Up kinda needs US large Caps to continue up for a while, albeit I do not expect stocks to hammer up, more a up and sideways crabing style price action until capitulation with non US large Caps to complete related retraces.  I was merely pointing out that the alternative scenario set requires stocks to turn down, are we there yet?

Oh and in my lead scenarios is also Bitcoin to top out at key resistance and fall away sharply to at least close 2 major price gaps.  I believe the Crypto resurgence is linked to the overall Fed driven buoyancy (call it greed, complacency, fantasy whatever...) and may fall first as an indicator of things to come.

💀🤯  

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On 21/06/2019 at 10:22, Mercury said:

Oh and in my lead scenarios is also Bitcoin to top out at key resistance and fall away sharply to at least close 2 major price gaps.  I believe the Crypto resurgence is linked to the overall Fed driven buoyancy (call it greed, complacency, fantasy whatever...) and may fall first as an indicator of things to come.

 💀🤯  

interesting view on this. I've always thought that cryptos are completely unrelated to other asset types which is why they're so difficult to price. Everything else has the inter-connectivity between themselves (Fed IR effect USD 'value', which knocks on to USD denominated assets, which leads into equities, re-positioning etc) but always thought crypto is a world unto its own. Linked to cost of production - electricity, CPU costs etc. 

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11 minutes ago, cryptotrader said:

interesting view on this. I've always thought that cryptos are completely unrelated to other asset types which is why they're so difficult to price. Everything else has the inter-connectivity between themselves (Fed IR effect USD 'value', which knocks on to USD denominated assets, which leads into equities, re-positioning etc) but always thought crypto is a world unto its own. Linked to cost of production - electricity, CPU costs etc. 

BTC at 'fair value' according to this pricing model;

image.thumb.png.21b31b75b287ed09cda7a57c8b2f8529.png

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7 minutes ago, Caseynotes said:

BTC at 'fair value' according to this pricing model;

you're right - correlation of two unrelated things is entirely accurate way to judge value. ;)

1994156171_2019-06-2609_37_56-SpuriousCorrelations.thumb.png.0d13e42b74eacccd68ea1d3aef4a1911.png

1333600428_2019-06-2609_39_16-SpuriousCorrelations.thumb.png.e80759753a448a36eec08ac3441d695e.png1151577405_2019-06-2609_39_38-SpuriousCorrelations.thumb.png.27a1e771f5e35d586e3e10c3589bc7e4.png

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2 minutes ago, cryptotrader said:

you're right - correlation of two unrelated things is entirely accurate way to judge value. ;)

I thought it was funny but can't help thinking 'Millennials'.

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1 hour ago, cryptotrader said:

interesting view on this. I've always thought that cryptos are completely unrelated to other asset types which is why they're so difficult to price. Everything else has the inter-connectivity between themselves (Fed IR effect USD 'value', which knocks on to USD denominated assets, which leads into equities, re-positioning etc) but always thought crypto is a world unto its own. Linked to cost of production - electricity, CPU costs etc. 

@cryptotrader, comments are always contextual, in this case I was not commenting on Bitcoin pricing merely my view that it is being driven by speculation the likes of which occurs at the end of a boom cycle.  The context is how this related to Silver, not Bitcoin per se.  What I am suggesting is that Silver (and Gold) will go into a long term rally off the back of a collapse in that over exuberant speculation driven by greed, FOMO whatever (maybe Gold has already started, maybe not quite yet?).  The back drop to this is central bank policy, which was originally put in place to kick start a failing economy but is now the drug that underpins the market.  And people can't have it both ways on this.  Either the economy is fine and so onwards and upwards or we need CB stimulus because it is not fine.  The latter is the case in my assessment and at some point the market will realise all the stimulus in the world is not going to change the facts in the real economy and when that happens Silver will take off like a bullet as the spec boom/bubble/mania (delete as appropriate to each market) collapses.

As regards you comments on Bitcoin, well I see you have opened another bitcoin thread so maybe I will answer (FWIW) there and keep this as a Silver discussion thread.

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Silver stubbornly remained below the overhead weekly resistance trend-line (Triangle if you like), until I see a breakout of this, and more likely also the 1560 resistance zone, I will leave this market alone.  If you believe that Silver (and Gold) are simply responding to USD then you should be Long but I do not subscribe to such correlations as being a credible trading strategy, these markets are far more complex than that.

I do remain long term bullish Silver and Gold but am not yet ready to go all in the mega bull.  On Silver we have seen a double rejection back from that weekly resistance trend line, purple line, and are in a consolidation or turning phase described by an inside bar price action formation.  Typically the break of such a formation resolves the direction (albeit that you can get fake breaks that quickly reverse so this alone is not a sufficient trading signal for me).  Another piece of trading wisdom, from chartist  perspective, is never to trade within a chart formation (e.g. inside a Triangle) but wait for the breakout.  This market could easily go Bearish from here, maybe with another failed retest of that weekly trend line (third times a charm?)  and make another test of the long term support trend line (this one is on the Monthly chart, very strong support).

From a fundamentals perspective, until the economy, and associated markets, go full Bear I don't see the impetus for Gold and Silver to go full Bull.  That may not be too far off but my analysis elsewhere suggest at least a month or three to go minimum (the upside on that is anyone's guess).  Current macro and political uncertainties may be at play int he current rally but another view is that governments are buying up as much bullion as they can in preparation for just such an economic shock bu don't want the price to kick off until they have hoarded as much s they can.  Check out the Real Vision service now in IG for some of this insight.

So net I have only 2 scenarios:

  1. the market reverses into a short to medium term bearish phase but remains within the weekly Triangle until the prevailing wisdom on the economy changes (i.e. until the game is up) and then rallies like crazy in a massive wave 3.  Note this is likely to happen at a breakout of the Triangle and not at the bottom so could just as easily happen next week so...
  2. The market does indeed breakout of the Triangle formation from here, or after a short further retrace down and then the massive long term Bull is on 

I favour scenario 1 because I don't see the game being up quite yet, a few months to go perhaps, and aligned to this USD is on bearish mode, which is not consistent, in my view, with the game being up.  Therefore my projection is for precious metals to follow USD down for a while (not due to related factors but nevertheless correlated) and then for all these markets to rally swiftly as save havens.  We may see these rallies begin before Stocks fall, they may offer an early warning that the end is nigh.

XAGUSD-Daily_290619.thumb.png.85600a7b10d5a644c1fd3fd7a2c7844f.png 

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Some IG content on Silver for those interested...

 

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Good morning all. I'm long silver, and the reason is not very scientific i must admit. I'm just hoping that the recent CFTC announcement that Merrill Lynch has been found guilty of  Criminally Manipulating Precious Metals Market "Thousands Of Times" Over 6 Years, will make the price suppression more difficult to achieve. I think a token $25 million fine means this manipulation will not end anytime soon though sadly. I have daily arguments with myself, asking why am i investing in what is currently a rigged game, but the optimist in me thinks this will change one day, and I dont want to miss out. Today could be the day ? Maybe.   

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Good piece on IGs Real Vision this morning on why this time it is different for Gold (and Silver); anticipating a breakout of overhead long term resistance and new ATHs.  Decent take on the Fundamentals, including the notion that in a NIRP environment one of the oft times quoted reasons for not holding gold (no coupon) is actually a benefit in a NIRP environment vs holding negatively yielding bonds.

However, the interviewee can be both right and wrong at the same time.  I buy his overall thesis, it is basically the same as mine, but I do not think buying Gold/Silver now and holding stops where he is suggesting makes any sense for most except those with deep pockets to accept the large potential draw down should these markets reverse.

I see as 50/50 the choice between a rally/bear move from here (maybe larger chance to the down side).  If we do get a Bear move it will, in my opinion, be a retrace in preparation for that big Bull.  I am not sure the timing is quite right to make the Bull call yet.

As said before in previous posts on this thread and my Gold/Silver thread, Silver needs to break out of the current weekly chart Triangle (down sloping trend line - purple on my chart below) and then has some more key resistances to content with.  Gold must break through the 1440 resistance level that it has failed to do twice now in quick succession.  Maybe third times a charm, maybe it needs to retrace to build up more Bull power to break through (50/50 at present).  Note Silver has already failed 3 times on its resistance trend line.

If I look at the Silver charts I see the following:

  • There is a clear wave 1 (pink) up to rally end in March, this is off a larger scale wave 2 (purple) retrace and rally off the long term supporting trend line - this means we are in a Bull market, from an EWT perspective
  • We have had a retrace in A-B-C form to and end and turn back up in June at the Fib 78% and a possible H&S neckline failed retest, all set for a big rally?  Seems so,
  • And a rally we got, much stronger in Gold but still it all points to a big breakout into that long term Bull right?
  • Well maybe but the rally on Silver wasn't a clear 1-5 (motive - inline with trend direction), actually looks more like an A-B-C, which is a retrace not a motive wave.  If this is right then a drop to a lower low (retest of the LT trend line) is on the cards.  The EWT set up for this is that the wave C in June was actually a larger wave A (red label) and the current topping out is a wave B that will lead to a lower wave C (circa 1420) and this will be the true end of the retrace.  If this plays out it will be a so-called complex retrace (lots of A-B-C whipsaw) and that is what might be expected ahead of such an important, game changing breakout.
  • I note that the inside bar formation I mentioned previously is still in play, despite a fakeout to the downside, because it has not broken higher.  Add to that, and everything else, 2 pin bars on the Daily charts and you get a fairly Bearish technical set up.
  • Even if the recent high and turn was indeed a wave 1 we should still get an A-B-C retrace to something like the Fib 50% to complete a wave 2 before another stronger assault on that resistance area.
  • Looking at the 4H chart for a close up of the current price action we can see the A-B-C to the recent high, wave B, (or maybe wave 1) and then 3 failed tests of the Weekly resistance trend line, the recent one looks like either a 1-2 or A-B.  This was followed up with another 1-2 retrace and a slightly lower low (not yet on Gold)
  • Note that there was NMD on the 1H chart at the recent high turn, I would be a bit worried if there was none on any chart...
  • Finally, in Gold at least, the non commercial futures & options commitment of traders data shows a net very Bullish reading (the net of longs vs shorts).  Last Tuesday we saw that Bearish pin bar top, which coincided with a net 280k long COT reading, yet the market dropped.  This Tuesday we saw something similar, I would not be surprised to see an even higher net COT long reading when we get the data tomorrow.  As a contrarian I use these COT readings to support my thesis for a turn, and I have it in spades on Gold.  The idea here is twofold: that there is no one selling so the market drops; never bet against the commercials, they know how much Gold there really is out there and how much (and who) is buying/selling.

Prognosis:

  1. Market reverses and breakout out of overhead resistance on strength - clear buy on Gold and Silver if both do this for me and I think both need to do it. -at present I think this will happen but later not now.
  2. Market retraces and we watch and price action patiently to decide where it might stop and turn (2 scenarios: simple 1-2 retrace to turn with a higher low than the June turn OR retest of the LT supporting Trend line and then turn).
  3. I guess there is a scenario where precious metals break down through the LT supporting trend lines but that is a long way off just now and doesn't fit my fundamentals or analytical set ups.

Short term on Silver I am looking for either that break out through the critical juncture (weekly resistance trend line) or a break below near term support (1510 - 1500) area.  I currently favour a Bearish move before another assault on the resistance to break out.  I think this may take some time (unless something dramatic happens this afternoon on USNFP) such that all the fundamentals play out, the key ones being as follows:

  • Clearer economic weakness signals (great Real Vision piece on this which calls out the true indicators of a recession, little to do with GDP, titled "The Capex recession call") - One of the reasons I am watching Retail rather than GDP.
  • Continuing and escalating political unrest (doesn't have to be dramatic variety, more Brexit type actions and Yellow Vest demos will do it)
  • Stocks top and drop - flight to safety
  • Fed and others go back to ZIRP/NIRP, maybe even yet another QE round, which may produce a short term bounce but this will surely signal the economy is uber weak...

XAGUSD-Daily_050719.thumb.png.5275adba6d6192b99df2c0e3fd5c97cb.pngXAGUSD-4-hours_050719.thumb.png.f625275dbdcbbd4d62f540efd1153f67.png

  

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Just to update on the end of the week price action, that inside bar has finally broken out, as indicated by the 3 X failed test of the overhead medium term resistance trend line and other related bearish indicators (see previous post for details).  I am not no longer concerned with whether the market will confirm a bearish turn but how far it will go.  For my style of trading it is important to maximise profits once I get in, although in this case I managed to get in first time with no entry losses.  Still overall I need to pay back entry losses with a high profit run so managing the trade in flight is key.  So what am I seeing and doing?

  • First up I have moved stops to break even, on my entries as I have loads of room and frankly a take out of my Shorts would signal a reversal.
  • Second I am watching Gold and USD for correlated price action, my 4H chart indicates a few possible turning zones for Silver but if Gold and USD continue to move in the current direction with conviction then another test of the LT supporting trend line is likely.
  • I will be watching oscillators like Stochastic for turn corroboration.  If this is a significant retrace, which current price action suggests, then I would expect Stochastic to hit oversold levels
  • I will also be watching non commercial COT data for signs of an overly bearish posture
  • Once in the turning zone I will be looking at my usual signals to identify good cash and reverse price action
  • I doubt the market will hammer down straight, although it may if bearish sentiment gathers pace.  This would be the idea scenario as we will quickly get to a good profit taking point with volatility that, if it carries into the reversal, will be a boost to any Long trades.
  • I have a feeling we will need to see some Dovishness from the Fed to trigger a reversal in sentiment so another 2 weeks perhaps, unless markets seek to position early.  For now I am content to hold and watch price action.

XAGUSD-Daily_060719.thumb.png.58a66752f04ebe33572b1772fa5bd527.png

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Having entered good Short positions off the strong resistance turn my task now is twofold: to manage those positions with a view to maximising profit take; to assess price action for a reversal back into a long term rally (my lead LT scenario).

Currently I have the following set up (in addition to previously noted overall set up:

  • There was a small A-B-C retrace to retest the initial ST support (now resistance) breakout level, which failed and formed a possible Flag.
  • This Flag was broken and retested, which again failed and price broke to new ST lows (where we are now)

The momentum is still Bearish and a break below ST support (circa 1490) brings up the second half of the move down (if the Flag holds true).  This gives me a target of about 1450 (see 4H chart).  However if the A-B-C (red labels) scenario holds then the Fib levels are all negated and the LT supporting trend line is the key.

In terms of trade management I have already moved my first Short area to BE and have close stops on my second position take at the failed Flag retest.  If we get that support level break I will move the second position to BE and watch price action to take profits at my 1450 target (unless price crashes through this level).  I want to take profits and swing back Long at the right moment but I am happy to take profits a little early on a counter trend move to secure them and then focus all my attention on the turn a swing trade.  I will be watching Gold and USD DX to see potential correlations in a bid to help identify the turning point.

XAGUSD-1-hour_090719.thumb.png.4f72bb1c4627fb2549414946bccc3dea.pngXAGUSD-4-hours_090719.thumb.png.674d242eaf139cb4bde72435621fbde0.png

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With the strong rally yesterday, especially on Gold, we may not be surprised to see the precious metals Bulls out in force, and they may yet be right, however price action within a consolidating Triangle, which is what Silver remains in, is typified with lots of whipsaw price action.  But can we make sense of the chaos?  I think so.  I think the move down was a wave A (green) but it was in an A-B-C form rather than the usual 1-5.  The rally could be (unconfirmed as yet) a wave B (green).  It was stopped at the Fib 62% and looks like it may be turning back down.  There are no other clear signals, you often don't get many on a wave B, but Stochastic on the 4H is overbought.

If USD puts in a rally for another leg up to key resistance (see my "what is the USD doing?" thread) then Silver and Gold could put in disproportionate bearish moves, which could see Silver carry down to those support levels I have earmarked.

XAGUSD-4-hours_110719.thumb.png.c57ad93694922fadcb14fab9fb9ac299.pngXAGUSD-1-hour_110719.thumb.png.b72263646fd5d6184b1cde51f3762684.png

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 Mercury very nice annotation and reasoning behind

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Silver price coming up on that wave B channel lower line.  A breakout here will be a strong bearish signal with still plenty of oscillator down side before this thing becomes oversold.  Should run for a good bit yet...

For me the key here is to spot the bottom, not so much to Short, having said that I am Short both Gold and Silver from their respective wave B turns and now stop protected as BE, however I wont be adding as trading within a Triangle consolidation is fraught with whipsaw danger.

XAGUSD-1-hour_110719A.thumb.png.5bfb37222ef3cdd8c09a2576746f27eb.png

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Lets see once it reach to resistance what sort of wonders it will do 

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