Today was a great example of a Taylor Trading Technique Sell Short day in the silver futures. Adding some ‘old school’ chart reading enhanced this trade.
Below is the daily chart for July silver futures. I had this week’s cycle as Wednesday Buy day, Thursday – Sell day. This made Friday the Sell Short day in the Taylor Trading Technique cycle.
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Yesterday’s rally was interesting; it came up to Fibonacci retracement resistance at 18.627. That level is a 50% retracement of the selloff from the 5/13 high to the 5/21 low. I view the 50% retracement level as the point at which a correction turns into a full fledged trend reversal. Thus, trading up to that put point silver at a crossroads. Failure to clear that level would likely lead to a selloff; breaking over it would mean we wouldn’t want to sell it.
The intraday chart for July silver futures for today is below. Early morning it rallied over yesterday’s high, then up to the Fib resistance. The move above Thursday’s high marked the ‘excess’ high that marks the end of the rally; the subsequent move back under there was our trigger to sell short.
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From the short entry in the 18.58 area, stop losses could go over the overnight high at 18.645.
On the morning Swing Trader’s Insight Watch List I noted trend line support at 18.25. This was the red up slanting line connecting Tuesday and Thursday’s lows. This was a likely pivot point on a selloff-holding the trend line would lead to a bounce, breaking it would likely lead to more downside. The bounce off the trend line was our cue to cover shorts.
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
