Chart Of The Day: Silver Turns Bearish On Dollar Strength


Silver completed a second consecutive bearish pattern, as it crosses below its uptrend line since the March lows.

So what pushed to its March low? The same thing as usual— strength, since commodities tend to fall as the greenback rises.

Silver Daily

Silver Daily

Silver completed a rising flag, bearish after the preceding 21% top to bottom plunge of Sept. 18 9/18 to Sept. 24, which itself included the pattern completing downside breakout of a bearish symmetrical triangle.

With these three interactive bearish signals, it will take a powerful market shift to undo the downside momentum.

The 50 DMA has been a resistance since the completion of the triangle, and the price fell yesterday below its 100 DMA.

Both triangle and flag imply a target of $20.00, where lo and behold awaits the 200 DMA.

Trading Strategies

Conservative traders would wait for a fall below the Sept. 24 low, the start of the flag, then for a return move that retests the flag’s resistance, before risking a short.

Moderate traders may wait for the same fall and corrective rally for a better entry, if not to retest the flag.

Aggressive traders may short at will, provided they have a coherent trading plan in place they commit to stick to.

Here’s an example:

Trade Sample

  • Entry: 24
  • Stop-Loss: 25
  • Risk: 1
  • Target: 20
  • Reward: 4
  • Risk-Reward Ratio: 1:4
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Source: Canada

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