Determinig A Short Entry Silver Trade

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Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

We haven’t brought up the Silver market for a while probably because when it comes to the precious metals lately Gold grabs all the attention. But we view the picture this chart illustrates a potentially significant one. There is a well defined trading channel that was briefly breached through to the upside. Our observation over the years suggests that when a breach of this kind occurs and when the market returns back within its trading channel there is often an ensuing correction or at least an intermediate term change in trend. This is why we are bringing it up in our blog.

Below is what we wrote in out weekly Trade Focus regarding how to approach a short entry trade. There may be other parameters to consider and as we all know things have a way of changing to where one suggested approach will need amending. But the point is we believe there is cause to give a short entry strong consideration. It would appear easily that one would know where the trade goes wrong.

Written in December 3 Trade Focus:

Silver (Mar.) – We see that the top end of the trading channel has been reached and so far has contained the price advance. We believe we can suggest a short entry approach from a price level of 191500 or better. (Current price as we prepare this section is 190100). If elected we suggest stop protection with intraday penetration of 196600. Retracement levels of support are approx.: 181120; 176770; 172430. The next series below is approx.: 168840; 160700; 152560.

Another approach that would be worth consideration in our opinion would be closing beneath the 50 day moving average. It is often more prudent to allow for two consecutive closes but frequently when there has indeed been a change in market course and attitude, it is difficult to exercise that patience and sometimes the market does not allow for that type of patience.

Changing parameters and entry level approaches is something that often demands attention. This would be just one of the things we typically discuss with clients.


Good trading all

Jeff
CB&S