Silver has been fishy lately-it’s been unable to decisively break above $14 as gold continued to rally. Today was a breakout day for silver: a narrow range day, a doji, and yesterday’s range was 85% of Thursday’s. The graphic below is this morning’s Trade or Fade numbers for today:
On a Trade day, I’m looking for a directional move; so I’m looking to by a rally above first resistance (R1 on the chart) or sell a break under support. The Trade or Fade numbers are a set of proprietary calculations that are added to the morning’s open (the pivot). This makes Trade or Fade more timely than the traditional “floor trader’s pivot numbers” which are priced off the previous day’s close. Below is the “post-mortem’ of silver’s trade this morning. The first move of the morning was a rally to test resistance-as it turned out, today’s Trade or Fade number coincided with the $14.00 resistance point. I had a buy stop working to buy a break above that point, thinking metals might get a “flight to quality” bid as stocks sold off. As it was, resistance held, and after holding support around the morning’s open, a decline started and accelerated.
The selloff pushed under first support at 1377, triggering a short sale. The initial stop loss was set just above the morning’s open-if the market reversed, I wanted out. The profit target for a Trade day sale is third support, or S3, which was 13.51. I liked this as a profit target, as 13.50 is a natural support point, being a round number and the midpoint of a dollar move. The profit target was hit shortly after 9:30, for an approximately $1300 trade in about 40 minutes.
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