The first one is risk-on sentiment across the board. Key fundamentals are described in the previous post. The main idea is that traders are getting out of the safe havens shifting the focus to high-yield assets. So the prices of precision metals like gold and silver slide due to decrease in demand together with stable supply.
Second reason is that silver traditionally follows gold’s price action. The H4 chart below shows me strong resistance below $1300.00 per ounce, 1295.99 to be precise. A failed attempt to break above it caused the pullback we see during last 48 hours. The prices are far below Simple Moving Average with 89 period (one of the Fibonacci numbers) and recent blue support line. This pattern increases further downside risks.
Third reason is the technical picture of the silver itself. I like to keep the analysis simply stupid and avoid too much complicated indicators. I guess you’ve noticed such charts, when you can’t see the price behind of indicators. I use Bollinger Bands indicator, it works well for my silver trades. First chart below is daily. You may see the bearish sell signal (NOV-17, red arrow), when the prices tried to reach the upper BB range. There are also two bearish japanese candlestick continuation patterns: Engulfing (NOV-29) and Three Outside Down (NOV-30). Add here BB continuation signal (two daily close prices below the range, blue arrow), and it would be more than enough to be confident about holding the silver shorts and hope for further downtrend.
The margin requirement for silver is much higher than for gold or EURUSD, and the spreads are wider, but it pays off with the volatility. Current profit is 600+ pips and still running. Those traders who missed the opportunity can still join the party on intraday upside corrections. Please feel free to contact me to get more information about simple and effective Double-Bolly intraday trading strategy.
Let the profit be with us!
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