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There were some happy Silver traders in September with the big fall into the 26th. You can read more about the analysis behind that setup in my September article, Mining for a Silver Trade.
On review it looks like a great run but many traders missed it because there was no simple end of day entry. Putting aside the possibility of an intra-day entry, we could look at a possible 2-day ABC short trade. Entry was outside limits on the December contract but just possible on the September, but this is where it gets tricky. Normally I would trade the contract with the most volume and as the September contract was about to expire, I would be looking at the December contract.
Another potential entry was on the breaking of point B on the 2-day swing (25/8).This was achieved on 22 September as the market started to fall with conviction. Chart 1: SI-SpotV with Possible Trade Entry
click chart to enlarge
Whether you took that trade or missed it, you will probably be wondering how you can get in on the next action on Silver. There is a strong price cluster under the current September low, which explains why the market is holding up there. There is a 100% repeat of the April-May range down from August, lining up with 50% of the major bear range from 2002 and an old low (January 2011). It appears we have double bottoms at 50%! Chart 2 shows this price cluster: Chart 2: SI-SpotV with Price Cluster
click chart to enlarge
Double bottoms can be a terrific setup in a bull market, as we are trading with the bigger uptrend. We need to clarify where we are on the bigger picture to understand which way this market will move. We have seen three clear sections into the April top (as shown in Chart 3) but have we seen the end of two sharp, short sections down from it? Gann tells us that bear markets can run out in two sections in a period of less than a year. If that is the case, we might be looking at the start of another larger section, but for now I think the April top will hold for some time yet. Chart 3: Sections of the Silver Market
click chart to enlarge
Either way, I would expect some form of rally from this 50% level. The 1/8th price targets indicated on the ranges resistance card might give us some areas to watch. I would be particularly interested if it came back to the 44.00 price level and formed a double top with the August high. Chart 4 shows this and also some lower prices to watch if the market continues the bearish move. Chart 4: SI-SpotV with Ranges Resistance Card
click chart to enlarge
I will be watching for a move up out of here before any attempt to break the September 26 low but if the market does fall below this, we could expect a continued bear market and those price levels would be ones to watch.
It’s the Journey
Lauren Jones
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