Silver: False-Breakout in Downtrend if Channel Re-entered
The medium term daily candle chart below shows the price of Silver trading around 19.53 around time of publication today.
This precious metal CFD tracks the underlying price of Silver, and over the last few trading days has broken out to the upside of a bearish channel that it has been caught in over the last few months.
The last time Silver was reviewed in the Ideas You Can Trade series it was described as poised to move lower within that channel, and has since done so with support found just recently near 19.25.
Since then the upside breakout may unfold to be a false one if the downtrend resumes and if 20.00 cannot be regained soon. Whereas if the reversal of the bearish momentum follows a bullish continuation could lift prices back towards back higher.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 20.01 with a Limit to take profit @ 20.51 and a stop-loss @ 19.61 Risk/Reward Summary: Limit risk = +50 points profit / (-40) Stop-loss risk = Gain to Loss ratio = 1.25
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 19.23 with a Limit to take profit @ 18.83 and a stop-loss @ 19.53 Risk/Reward Summary: Limit risk = +40 points profit / (-30) Stop-loss risk = Gain to Loss Ratio = 1.33
Medium term chart (daily candles):