Gold and silver futures had a big outside day up (lower low, higher high and close) yesterday. The chart for silver futures looks great; let’s take a look at where opportunities may be coming up.
Monday had a breakout setup; it had the narrowest trading range of the previous seven sessions, it also was an inside day and a doji. Monday’s setup resulted in a big “directional move” rally yesterday. Trade or Fade followers often ask if I recommend taking a trade in the opposite direction if there’s a failed breakout move (like we saw yesterday). It can be painful to do so, but the second breakout often ends up in a big move as the initial breakout traps people going the wrong way.
breaking out of a big triangle
Normally I’d be looking to sell out long positions the day after a breakout rally, but it looked like there could be more than a one day rally in it. By this morning it had rallied over significant resistance at the August high of 18.70. By later this morning it broke the down trend line at 18.85. This trend line came off the May high (2010 high) and the first reaction high.
A close up here would be significant, especially in light of the bullish MACD crossover showing up. The ROC indicator indicates there could likely be a correction tomorrow; a break could be an opportunity for bulls to get on board.
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
