Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
This week, we are returning to the precious metals with a bearish setup on silver that can provide an attractive opportunity to go short.
As a reminder, the long-term fundamentals for silver remain bullish on a strong foundation of likely increased industrial and safe-haven demand in the future. So, the potential trade that we are going to discuss below is still only a tactical short setup. Yet, it may take silver all the way down to the $20.00 area.
While that may seem like quite a lot of downside, it would still not break the uptrend that started a year ago. At least from a technical analysis point of view, only a decisive move below this $20.00 support area would begin to challenge this uptrend.
However, let’s leave this long-term discussion for some later time, and let’s now focus on this potential selling opportunity that the market may give us in the next few days.
XAG/USD technicals are turning bearish with an impending break of key support
The trend in silver has been down since that speculative blow-off top on February 1. As is often the case with such volatile price spikes, once the whole speculative move has been reversed, a downtrend follows. It appears something of this nature is transpiring here.
The bears are now making an attempt at the $25 zone, the last line of support that will open the floodgates to a further sell-off. It is this breakout point that we are watching as a trigger for a potential short trade.
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The exact support area around $25.00 that needs to break could turn out to be a little tricky to pinpoint, but there are some markers we can use. It seems that the $25.00 level itself is the most prominent marker traders are watching. The whole support zone around it stretches down to $24.75, which is where the lows from early March stand. So, the key support zone seems to be $24.75 - $25.00 (see chart
above).
Slightly below it, we also have the 200-day moving average (red line), currently located near $24.60. This could also provide some support, but it’s doubtful that it will hold if the above-mentioned $24.75 - $25.00 area breaks.
Note: Some traders (maybe even many) will look at the current setup as a head and shoulders pattern. We don’t. That’s because there is no preceding uptrend before the pattern. Nonetheless, the projection of the head as a target may still work, which also points to the $20.00 area as the target. Watch this
space as it strengthens the narrative that a breakout of $25.00 may indeed take silver down to $20.
Once silver breaks through the $25.00 support area, the move could accelerate pretty quickly and take the price toward the next key support area, which is $22.00. What happens there will be trickier to tell, so, in the event of a bearish breakout of $25.00, the $22.00 zone is our initial target. If $22.00 breaks, too, then the next target will be $20.00.
Entry:
- Wait for a break of the $25.00 support area.
- Then look to enter on a small pullback, if possible, or some continuation pattern.
Stop:
- Above the breakout point;
- The price should not get above the red falling line if this trade is going to work well; currently, the line stands in the $26.00 area. So, the maximum stop loss to the upside is the $26.00 - $26.50 zone
Targets:
Trade signals from the past week
TOTAL: 0 pips profit in the past week
TOTAL: +3900 pips profit since October 1, 2018
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Thank you!
High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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