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Silver: Ideas You Can Trade- short term bullish momentum in bearish trend

Posted by Steven Hatzakis on Jul 11, 2013 10:40:00 AM

SILVER: Short term bullish momentum in medium term bearish trend                      

The short term daily candle chart below shows silver ascending a very-short term bullish support line (point 1) which could provide a continuation for the recent bullish momentum of the last few trading sessions.

The definitive medium term trend has been decisively bearish with silver followin a medium term bearish channel (point 3) with intermittent short term steeper bearish momentum (point 4) followed by less bullish recoveries (point 5) after each short term bearish (like a bearish stair-case formation). The long term view is similar: see second chart below for comparison. After silver traded below this medium term bearish channel (point 3)  in April 2013 - the lower line of that channel then acted as resistance - and eventually Silver found support much lower along a long term bearish support line (point 6) which recently brought prices back up to current levels (trading around 20.00 as of publication).

This short term bullish momentum could be just that, "short term", in the context of a longer term bearish channel. If the current short term bullish support line (point 1) cannot be maintained, silver may test another bullish support line just below it (point 5). If this is  violated too, it could allow a re-test of the long term bearish support line (point 6) which could bring silver to fresh lows for the year.

If the short term bullish support line (point 1) is sustained then silver may re-test upside resistance at the lower trend line of the medium term bearish channel (point 3). If the resistance holds this could reverse any short term bullish momentum or, if resistance fails it could allow silver to target the bullish support lines of a long term channel intersecting just above (point 2).

Below are examples of how to trade a bullish continuation or a bearish reversal:

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 20.39 with a Limit to take profit @  21.07 and a stop-loss @ 19.84 Risk/Reward Summary: Limit risk = +68 points profit / (-55) Stop-loss risk = Gain to Loss ratio =  1.24

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 19.34 with a Limit to take profit @ 18.87 and a stop-loss @ 19.71 Risk/Reward Summary:   Limit risk = +47 points profit / (-37) Stop-loss risk = Gain to Loss Ratio =  1.27

Short term chart (daily candles):

silverdaily july 11 2013 note

long term view for comparison (daily candles):

silverdaily long term july 11 2013 note

 

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