Will Silver Continue To Rise? [What To Watch]
Silver exploded on Wednesday, with the benchmark SLV ETF opening 3.1% higher than the Tuesday close. It then peaked at 16.15 before falling back slightly to close at 15.97. The gap up on the chart is quite remarkable.
The question now is: Can silver continue this run? In premarket trading today SLV is off slightly, trading at 15.78, just below yesterday’s open and below yesterday’s close.
Traders call gaps-up like this “rising windows”. Typically, the area between the top of the previous day and the bottom of the gap-up day candle is viewed as resistance, as shown above.
Falling back down into the resistance area is viewed as negative. Obviously, to continue higher price should continue to remain above the bottom of the gap-up day candle.
So what silver traders will be watching today is whether silver dips into the resistance zone. In practicality, it’s OK if it dips into the resistance zone, but we want to see SLV close above yesterday’s low. Otherwise the pop yesterday may turn into a short-term fade back down to the previous trading range, between 15.60 and 15.00.
One factor looming in the background: Many traders who owned silver before yesterday’s pop will have their stops set just below yesterday’s low. So if SLV dips below that we may see a small flood of selling, which would drive silver prices down, making recovery difficult.
Traditional traders wouldn’t buy more silver unless silver either works back above the resistance zone or goes above yesterday’s high.
Keep in mind that nothing is ever certain in trading, and resistance can be worked through with enough interest from buyers. The big question today is whether there are buyers out there still willing to take a risk on silver.
Signed,
The Gold Enthusiast
DISCLAIMER: The author has no position in any mentioned security. The author is long the silver sector via small positions in AGQ, PAAS and SVBL. He has no intentions of trading these positions in the next 72 hours.
Note: This article originally appeared at The Gold Enthusiast on August 8, 2019.
Category: Commodities