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Ideas You Can Trade: Silver- Uptick in Downtrend, Lower-low to Follow

Posted by Steven Hatzakis on Nov 25, 2013 4:13:00 PM

Silver: Higher Today as Uptick in Downtrend May Preclude Lower Low

The medium term daily candle chart below shows the price of silver moving higher today by nearly half of a cent after reaching sessions high's from opening, and trying to break above a short term bearish channel (point 1 in yellow on chart), and is trading near 20.19 as of publication.

Silver has been caught in downtrend (point 3 in magenta) most of the past year which doesn't look like its ending anytime soon from a technical perspective, although is approaching previous lows - where support may be found. However, for now it looks like a lower-low than today's session may follow, unless the momentum of today's session can continue pushing prices higher.

As discussed in the last article from the Ideas You Can Trade series regarding Silver, the upper line of the medium term bearish channel (point 3) still appears to be an imminent target and closer since then.

Similarly, with regards to the prominent guiding trend lines of recent weeks, if the momentum of the last 2 weeks continues along the current short term bearish line (point 1 in yellow), reaching the upper resistance line of the medium term bearish channel (point 3) may happen sooner than later. If this upper resistance line of the medium term bearish channel is breached a very steep descent could follow into that channel and test the lower line of the Linear Regression indicator which has been plotted over the last two hundred days (point 7 in white). 

From a different perspective, the uptick of today's session could be more sustained than fleeting, with a continuation atop a line such as that of previous short term bullish momentum (such as point 2 in blue) and with a strong bullish reversal possible (such as point 5 in aqua) leading to a target of the long term bullish channel (point 4 in green) and with a likely return lower shortly thereafter (as the bearish trend resumes).

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

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 20.39 with a Limit to take profit @ 20.95 and a stop-loss @ 19.98 Risk/Reward Summary: Limit risk = +56 points profit / (-41 ) Stop-loss risk = Gain to Loss ratio =   1.36

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 19.48 with a Limit to take profit @ 19.04 and a stop-loss @ 19.81 Risk/Reward Summary: Limit risk = +44 points profit / (-33 ) Stop-loss risk = Gain to Loss Ratio =  1.33

Medium term chart (daily candles):

silverdaily nov 25 2013 note

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