Silver: A Bullish Move From Bearish Territory Giving The Metal Greater Prospects for a Continuation Higher
The medium term daily candle chart below shows the price history of the Silver contract for difference (CFD) which aims to track the price of the underlying precious metal. Today Silver is trading near 17.11 around time of publication, after trading sharply higher in yesterday's session.
Last time Silver was reviewed in Ideas You Can Trade, the trend was poised to move lower and support near 15.00 was predicted. Since that last post Silver fell past 15.00 before making an equally large recovery the next day, and has since moved towards current levels.
Yesterday the metal escaped above the medium term bearish channel (point 3 in magenta on chart below) which had been providing bearish support via its upper line on nearly the last eight sessions.
Yesterday's large bullish move from bearish territory has caused the metal to hit resistance under a prior support line that had guided the recovery from November's low (point 2 in blue on chart below). If this line is regained support could form higher and push Silver towards 18.00, whereas a failure to regain support above that prior bullish line could cause the pair to dive steeply back towards the slope of the medium term bearish channel. While the prospects look more bullish, Silver is still not completely out of bearish territory.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 17.40 with a Limit to take profit @ 17.76 and a stop-loss @ 17.09 Risk/Reward Summary: Limit risk = +36 points profit / (-31) Stop-loss risk = Gain to Loss ratio = 1.16
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 16.72 with a Limit to take profit @ 16.29 and a stop-loss @ 17.01 Risk/Reward Summary: Limit risk = +43 points profit / (-29) Stop-loss risk = Gain to Loss Ratio = 1.48
Medium term chart (daily candles):