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Chart Of The Day: Silver Is Set To Soar

By Investing.com (Pinchas Cohen/Investing.com)CommoditiesMay 12, 2020 09:49AM ET
www.investing.com/analysis/chart-of-the-day-silver-is-getting-ready-to-jump-200524373
Chart Of The Day: Silver Is Set To Soar
By Investing.com (Pinchas Cohen/Investing.com)   |  May 12, 2020 09:49AM ET
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Silver, gold's cheaper but often overlooked precious metal associate, has completed a bullish pattern. It appears the white metal—which has both luxury and industrial uses—is about to catch up to gold, by replicating its medium-term surge even as the yellow metal has been beset by profit-taking during the same time that equities bottomed at the end of March.

Silver Daily
Silver Daily

Silver futures have been trading according to a falling flag. That's a period when new bulls come in to pick up the profit-taking supply sold by earlier bulls. It's considered bullish after the range followed an advance.

The RSI developed a failure for a would-be H&S top, as momentum was slowing down per the dynamics of the falling flag, described above. The recent return above the neckline, demonstrates a spike in momentum to complement the upside breakout of the price.

Similarly, the MACD—which is a lagging indicator, as opposed to the momentum-based RSI—is showing the same thing, with the short MA falling, then climbing back above the long MA. It's demonstrating that the price advance has broad-based support, rather than it being just short-term noise.

Conversely, the actual price is better than the average price of the last 50 days, as the price crossed above the 50 DMA

Putting it all together provides an argument for another rally for silver, one that's even more powerful than the one seen for gold, as it closes the gap between them.

Trading Strategies

Conservative traders would wait for at least one long, green candle, followed by a return move to verify the tenacity of demand, with a bounce off the pattern.

Moderate traders may wait for the same deeper penetration beyond the pattern breakout, as well as wait for a pullback, for a better entry, not necessarily for proof that the supply-demand balance has returned to the preceding trend.

Aggressive traders may go long now, provided they accept the possibility of a bull trap and execute a plan accordingly.

Trade Sample

  • Entry: $15.75
  • Stop-Loss: $15.00
  • Risk: $0.75
  • Target: $18.00 – the minimum implied target based on measuring the jump before the pattern
  • Reward: $2.25
  • Risk:Reward Ratio: 1:3
Chart Of The Day: Silver Is Set To Soar
 

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Chart Of The Day: Silver Is Set To Soar

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Comments (6)
Mihir Kamat
Mihir Kamat May 15, 2020 11:42PM ET
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I am short at 16.50 level , can it be possible to see this level on Monday before further upside?
Sudhir Belhekar
Sudhir Belhekar May 15, 2020 2:04AM ET
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woow...you are one of the most intelligent chartist I came across Pinchas...I am from India and always follow your article..till date most of the time you got your analysis correct...please keep sharing your thoughts Pinchas...cheers
Arthur Thompson
Arthur Thompson May 12, 2020 11:33PM ET
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It could be interpreted as a rising cone and the flag being where it broke down and moved sideways. It depends on how your chart is set up. It all could be right, but I see a little differently.
ash ash
ash ash May 12, 2020 10:06PM ET
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Unless it pass the $16.00 resistance than we can see it go higher
Trend Follower
Trend Follower May 12, 2020 9:37PM ET
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I do not see it on my charts!
Heine Pedersen
Heine Pedersen May 12, 2020 12:12PM ET
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I don't think JPM agrees..
 
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