Silver: Trying To Recover After Last Week's Drop, and Opening Higher For Fifth Consecutive Trading Session
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 17.415 around time of publication.
Last time Silver was reviewed in Ideas You Can Trade in mid-December - a bearish continuation was expected but was subsequently missed as the medium term bearish channel was avoided, and then a bullish continuation had pushed prices to a recent high under a longer-term bearish resistance line (red line on chart below) on January 21st.
After failing to break above that resistance line - Silver dropped sharply last week, and has since opened higher in the five last trading sessions including today, and as volatility in forex markets continues.
If the slope of the bullish momentum of the last five days continues, then the longer-term resistance line could be retested near 18.35, whereas if the bearish line drawn from the January 21st high towards the highs of the last two days is maintained as resistance -then Silver may drop back under 17.00 before heading lower for support (these two trend lines should converge to form a completed triangle pattern, in the next few days).
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 17.79 with a Limit to take profit @ 18.35 and a stop-loss @ 17.39 Risk/Reward Summary: Limit risk = +56 points profit / (-40) Stop-loss risk = Gain to Loss ratio = 1.40
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 17.21 with a Limit to take profit @ 16.73 and a stop-loss @ 17.60 Risk/Reward Summary: Limit risk = +48 points profit / (-39) Stop-loss risk = Gain to Loss Ratio = 1.23
Medium term chart (daily candles):