There are instances when your time horizon can have a large impact on a trade you place. While you may be bullish on a certain security in the long term, things may not look too hot when you zoom in to a short-term or intraday chart. That seems to be the case for me with precious metals, specifically silver. I think precious metals make sense for the long-term but when I look at a simple daily chart of the spot silver market things don’t look as shiny.
Silver has created a triangle formation with the falling blue trend line and rising blue trend line as shown on the chart below. The bottom trend line is just below the 200-day moving average, which provides silver bulls with an extra layer of support so to speak. When looking at momentum, based on the relative strength index in the top panel we can see that each rally attempt is price is creating lower highs in momentum.
So while long-term bullish on this shiny metal things appear to be setting up for a possible rocky road for silver in the interim. When looking at a triangle pattern as the chart above shows, most traders will wait for a breakout before looking for an entry, no matter if it’s on the long or short side. While other more conservative traders oftentimes prefer to see a trend line re-tested after a breakout in order to get confirmation of a possible new trend. Whatever your preferred method make sure you stick to your plan.
Disclaimer: The information contained in this article should not be construed as investment advice, research, or an offer to buy or sell securities. Everything written here is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned.
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