Silver Gann: Long term long, medium term short, short term long
מעודכן
Silver is a difficult market, because it is easy to corner the underlying and easy to manipulate the futures. There are powerful forces at work. At the moment we are not mining as much silver as we are using, but the deficit is still being covered by reserves. So the long term fundamental outlook is up, as reflected in the chart with a pitchfork, however we have been in a trading range since 2015.
Medium term, the trend is down as reflected with a Gann square, but are we at bottom yet?
My answer is no, not yet. Until this Christmas-New Year week I've been short, but have now stopped out. Have we just seen a double bottom?
The -1:1 Gann Square has the -1:1 fanline meeting the 5th pair of arcs now, and exiting the box in 18 months time, with prices potentially getting below $10. We are in a wedge, which is likely to break in the direction of the prevailing downtrend. We see RSI and MFI slightly oversold at similar levels to the previous bottom, so perhaps we a due for a third substantially lower bottom.
I was looking for a spike down over Christmas-New Year as we hit 400% time in the Gann box, but the -1 ray of the pitchfork has held, and we have seen a break up instead. Christmas-New Year is notorious for false breaks on low volume, and even some market manipulation. Are we seeing a false break?
Well, we've now seen two following up days as confirmation of the break, so Gann would say we have our buy signal in terms of both price and time - the main caution is the time it occurs, but almost half the significant tops and bottoms occur in Dec-Feb in many markets, many associated with the holidays - and Silver has seen its share of these. So I'm inclined to expect a spike up at New Year, climbing the 5th pair of arcs towards the median tine of the pitchfork - although previously it has met resistance at the -25% tine.
This gives us a target range of 16.53 to 16.95 in January, with an expectation of increase volatility as we leave the arcs and retest the -1.618 tine and the $10 levels later in February. Then it may slip into the Fibonacci channel again similar to 2015, spending 2019 consolidating a range around $9-10. There is a bottom in this range at the start of 2009 and I expect it to consolidate above this level, but below the previous $12-13 consolidation before and after that bottom.
Pure science fiction? We'll see real soon now!
Medium term, the trend is down as reflected with a Gann square, but are we at bottom yet?
My answer is no, not yet. Until this Christmas-New Year week I've been short, but have now stopped out. Have we just seen a double bottom?
The -1:1 Gann Square has the -1:1 fanline meeting the 5th pair of arcs now, and exiting the box in 18 months time, with prices potentially getting below $10. We are in a wedge, which is likely to break in the direction of the prevailing downtrend. We see RSI and MFI slightly oversold at similar levels to the previous bottom, so perhaps we a due for a third substantially lower bottom.
I was looking for a spike down over Christmas-New Year as we hit 400% time in the Gann box, but the -1 ray of the pitchfork has held, and we have seen a break up instead. Christmas-New Year is notorious for false breaks on low volume, and even some market manipulation. Are we seeing a false break?
Well, we've now seen two following up days as confirmation of the break, so Gann would say we have our buy signal in terms of both price and time - the main caution is the time it occurs, but almost half the significant tops and bottoms occur in Dec-Feb in many markets, many associated with the holidays - and Silver has seen its share of these. So I'm inclined to expect a spike up at New Year, climbing the 5th pair of arcs towards the median tine of the pitchfork - although previously it has met resistance at the -25% tine.
This gives us a target range of 16.53 to 16.95 in January, with an expectation of increase volatility as we leave the arcs and retest the -1.618 tine and the $10 levels later in February. Then it may slip into the Fibonacci channel again similar to 2015, spending 2019 consolidating a range around $9-10. There is a bottom in this range at the start of 2009 and I expect it to consolidate above this level, but below the previous $12-13 consolidation before and after that bottom.
Pure science fiction? We'll see real soon now!
הערה
The comment on RSI and MFI was based on the Weekly chart (14 days) which is what I mainly work off. The zoom into the daily chart shown (which newbie me couldn't see when writing because it disappeared on hitting PUBLISH) makes the important junctures of the first half of 2019 a lot clearer.ATR is shown as a form of daily volatility (low at present) that is used Turtle-style in position sizing and stop setting. Close stops for short term positions are at 0.5ATR while medium terms positions use a 2ATR consolidating trailing stop. For a day trader, ATR determines whether a possible trade is tradeable or not, while for an intraday trader, bid-ask spread is a more significant factor (but tends to be more constant, as controlled by market makers or scalpers).
הערה
Silver has indeed moved up in the first week of the year, and once it breaks 16 (as I expect, although I just took profits on my long and I hope to reenter lower) it is likely to settle into a trading range (or wedge) for the rest of January (similar to last Feb/Mar/Apr), but not lasting as long. Consistent with the above prediction, I expect it will test 17 at the beginning of February then head down quickly as described.הערה
If entering (a half position) on breaking 17, beware that the initial break is likely a false one followed by cleaning out stops below 17 down to around 16.5 (guess where my stops won't be). This will give a new buy opportunity (for the other half position) in expectation of the true break.הערה
Note that there is less likelihood of a false break on breaking 16 due to the Feb-Apr consolidation at those prices, but the same principle applies.
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