Will Silver Continue To Rise? [What To Watch]

| August 9, 2019

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.

silver

(credit Fidelity.com)

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.

 

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Category: Commodities

About the Author ()

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals. Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach. Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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