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We have seen a terrific run up on silver this year following the triple bottoms but we are now faced with a potential double top. This poses the question: “Which is stronger – double tops or triple bottoms?”
Let’s look at the bottoms first. I discussed the price support under the triple bottoms in a recent article entitled Long Silver, John!. They lined up with 50% of the 1991 to 2011 range and 50% multiples of the two lows. Silver has now reached 100% of the range up from the September low (as shown in Chart 1), and this is clustering with 200% of the ABC long from the December low. I would now expect a pullback at the 100% level but whether this will be just be a retracement against the trend or a change in trend in still to be seen. Chart 1: Silver Daily Bar Chart
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Now let’s take a look at the double tops. They are sitting on 50% of the run down from October to December (as can be seen in Chart 2), and this is clustering with the 100% milestone of the double bottom ABC. Double tops on 50% are a favourite setup of mine, so I will be on the lookout for a short opportunity. However, if the double tops are taken out, I will be looking to reverse my position to take advantage of a continuation of any up trend. Chart 2: Silver Showing Double Tops n 50%
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The swing charts are presenting a mixture of trends. The One Day is uncertain, the Weekly is an up trend and the Monthly is a down trend. I have shown these together in Chart 3. Look out for the Weekly trend to continue if the double tops are taken out. Chart 3: Swing Charts on Silver
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If the double tops are taken out, this will confirm an up trend on the Daily chart as well. I will be looking for price clusters in the weekly range, milestones from the double bottoms and ABC long trades to give me a profit target. At the time of writing, there is a short setup available and I can’t ignore that. This would be a good time to take any long profits if trades weren’t already closed out, and to be ready for the next move in either direction by being able to stop and reverse as the market tells its story.
It’s the Journey
Lauren Jones
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