December Silver appears bound for the 31.285 target shown, a 15% rally from here. The target has been in play since August 12, when a strong upthrust first touched the green line. But it has been a trying slog for bulls ever since, even if the gratuitous ups and downs have provided ample sustenance for traders. Last week’s ratcheting downtrend tripped a weak mechanical ‘buy’ at the red line, stop 26.30, but I didn’t trade it ‘mechanically’ myself because Silver’s rebounds from Hidden Pivot levels have lost much of their vigor. Under the circumstances, the futures could easily drift down to the stop and regain their lazy energy for another rally. The workaround is to bottom-fish with rABC patterns, and so I did: with small -a-b segments fashioned from the 15-minute bar chart. The small rallies were profitable in a small way, but they went nowhere.
Now, if the futures were to fall to x=25.671 (the green line), they would signal a ‘mechanical’ buy somewhat more appealing than the one last week at the red line. The stop-loss would be at 23.795, implying a theoretical entry risk of about $9400 per contract. Although I would rate the odds of this trade working as excellent, the dollar risk is obviously much too high to employ a straight ‘mechanical’ entry. Again, the workaround would be to fashion small-pattern rABCs if and when the December contract falls to 25.670. I would encourage most of you to simply paper-trade this one, since it’s a good way to increase your confidence in ‘mechanical’ set-ups. These trades provide the easiest way I know for relative beginners to make money consistently. I haven’t kept close track of our winning streak with posted ‘mechanical’ set-ups, but anyone who has could attest that the streak has been formidable and quite profitable. _______ UPDATE (Sep 9, 11:44 p.m. ET): When bulls are ready to make their move, they will signal it by pushing past the 27.890 ‘external’ peak shown in this chart. A two-day close above that above it would put the 31.285 target flagged above back in play.