What’s inside:
- Range-bound market looks like a high likelihood scenario
- Buying at current resistance levels does not present good risk/reward
- Short-term chart for further guidance
On Friday, we said silver may be carving out a broader daily range, but pointed to a rising channel, or set of parallels which was presenting itself as guidance in the short-run. The lower parallel we had penciled in as support was never touched and a rise back into the 20.48/66 vicinity is where we are today. This is a key area consisting of multiple inflection points created over the past month.
Chasing the metal higher here at resistance doesn’t present good risk/reward at this time. The short-term trend structure is higher, though, so as long as the series of higher highs and higher lows remains in place, then silver doesn’t make for the most attractive short outside of scalps. A decline below the rising lower parallel would likely bring about weakness towards 19.20. But, the lower line will be viewed as support until it isn’t.
As said earlier, silver could be carving out a broader range from around current levels down towards the 19.20/00 region. Given the extended run since the end of last year and the still historically high level of speculative longs in the futures market, this would come as no surprise, and could end up being the best thing for silver longer-term. A consolidation phase could go a long way towards building a base for another surge higher.
Find out what the #1 mistake traders make, and start improving your trading today with our free trading guide, “Traits of Successful Traders”.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
He can be reached via email at instructor@dailyfx.com with any questions or comments.
