I made a post a while back about going long on silver. These were originally posted over on my LinkedIn groups, but I have yet to port them over here. Let's start off with the update. The original post will follow that.
Update:https://charts.mql5.com/5/441/xagusd-d1-international-capital-markets.png
XAGUSD and it's associated .Silver has been falling for the past few days. As of the moment, it only looks to continue. It stalled a bit with highs hitting the $20.10 area. More importantly, it's faced with the moving average resistance. 65 SMA is the preferred setup as it serves as a dynamic support and resistance, which in this case looks more on the resistance side. Long entry price target is once again set to $19.11 cross.
Original Analysis (About 2 and a half weeks ago):
Silver seems to be in the spotlight these days as the $19 to $20 point shows a consensus entry. However, better to wait it out for the next few days. The short term (daily) time frame forecast for silver or XAGUSD, in this case, doesn't look too optimistic. Looking from a PA approach, don't expect to see a rise. Sure, you may be going for a buy and hold for weeks, months, or even years, but best to wait out this fall for an optimal entry price. Here's the chart:
https://charts.mql5.com/5/321/xagusd-d1-international-capital-markets.png
The $20.60 level (red line) marks a resistance turned support turned resistance turned support and support continued level as early as late July of 2013. Let's call this the "S/R Level" to mark a critical turning point. We see a bounce on July 16 and 17 of this year. Right now it appears as if it wants to breakout lower, but still with quite a bit of demand. The strong bearish candle is followed by an immediate bullish candle, which we can assume scalpers are covering shorts. The recent candles are much smaller so we will not take these two into consideration for now. Back to the strong bearish candle and following bullish candle, the lows look the same so one might conclude support is found at around the 38.2 Fibs level. However, look at the pattern of February and March of 2014 (earlier this year). The lower high pattern is followed by a strong sell-off. This is also the case for August to September, 2013 and late October to early November of 2013 as well. Beginning in December of 2013, silver consistently found support along around the $19.11 price level, testing this level seven times. I took the liberty to mark in a second untested support level that resembles massive demand at the $18.## level.
Trading Plan:
For the aggressive trader, a long entry now at the 38.2 Fibs level in case price found support here, which is highly unlikely. Scale in again and average down your entry price by going long again at the $19.11 level. If necessary which seems highly unlikely, a third entry can be made when price crosses lower than $18.50. For everyone else, waiting for the fall to $19.11 will provide the most affordable entry point.
Do keep in mind that the price may start ranging after the rebound of $19.11 to follow the December, 2013 range. However, seems unlikely once again as we see a wedging price consolidation looking at the bigger picture from mid-August 2013.
