Silver: Medium Term Bearish Channel Still Guiding Prices Based on Latest Bearish Momentum
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 16.025 around time of publication.
Last time Silver was reviewed in Ideas You Can Trade earlier in December - a break above the upper resistance line of the medium term bearish channel (point 3 in magenta color on chart below) had given the metal more bullish prospects to move higher.
Since then and after failing to hold above 17.00 for more than a few days, the bearish momentum has resumed down the existing bearish channel - indicating how that channel is still guiding prices.
For a bullish continuation a recovery back above 17.00 would be needed, and is also a real possibility considering the volatility of the last few days.
A break below today's low (15.725) and near 15.50 could be an entry point for traders expecting Silver to retest near either October's low near 15.00 or November's low near 14.00.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 16.32 with a Limit to take profit @ 16.99 and a stop-loss @ 15.89 Risk/Reward Summary: Limit risk = +67 points profit / (-43) Stop-loss risk = Gain to Loss ratio = 1.55
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 15.45 with a Limit to take profit @ 15.04 and a stop-loss @ 15.85 Risk/Reward Summary: Limit risk = +41 points profit / (-40) Stop-loss risk = Gain to Loss Ratio = 1.02
Medium term chart (daily candles):