When Silver reversed two weeks ago after having breached two key lows from Q4 2020, we should have expected the bounce to be a doozy, since many bulls would have been stopped out near the bottom. Instead, we got a rally that has died after just a week, and now a downtrend that looks likely to test the old low. We should know soon whether it will reach the 20.16 target of this lesser pattern, but in any event, there are likely to be several enticing opportunities to bottom-fish on the way down: at 22.06, 21.72 and of course 20.16. All three of the Hidden Pivots can be used with a limit bid and a super-tight stop-loss, but an rABC set-up would be best. ______ UPDATE (Aug 23, 11:06 p.m.): If Silver takes out the point 'C" high of the pattern shown, that would negate our bottom-fishing strategy. ______ UPDATE (Aug 24, 6:10 p.m.): Ha-ha, how cute. The futures stuck their grubby little snout two pennies above 'C', then barely retreated. I won't comment on what this might mean because I don't exactly know, but it seems a tad bullish, no?
Like the bounce in gold, silver's rally is suspect because it follows a death-dive that breached two major lows recorded in the final quarter of 2020. That implies the bounce, now in its second week, is corrective, although not quite necessarily doomed. Indeed, it would hardly be unusual for a rally with legs to develop following a dip beneath a support that too many bulls were counting on, as has surely occurred here. However, because quite a few of them will have been stopped out, silver should be sufficiently lightened of profit-takers to climb like an F-22 Raptor. So far, except for the first day's bounce from the low, that has not been the case. But because the rally accelerated as the week ended, we'll give it the benefit of the doubt for now. I will connect up some ABC dots if and when the bounce either surpasses some minor 'external' peaks on the intraday charts (the first lies at 24.38), or tops and relapses.
The pattern shown in the chart is gnarly perfection, meaning not only that September Silver is likely to fall to at least D=24.04, but that it is just as likely to bounce precisely from it. We'll plan on bottom-fishing there even though the trade could conceivably be out of sync with gold, which looks weaker. A 'simulated' rABC set-up can be used for this purpose, with a= 25.565 on the 60-minute chart at 10:00 p.m. on 8/3. I have added this coordinate to the chart, although you may need a magnifying glass to find it without zooming in on your own chart. Do not attempt the trade unless you understand it, and realize as well that it could trigger Sunday night -- or not trigger at all if silver gaps below 24.04. ______ UPDATE (Aug 9, 9:26 p.m.): There are just two targets left for this blowout: 21.72 and 21,34, respectively. Here's a chart that shows the provenance of both. Either or both warrant bottom-fishing with a small-degree 'camouflage' set-up. ______ UPDATE (Aug 11, 8:45 p.m.): I'll be more receptive to the idea that bulls actually intend something if they can push this scow above the 24.39 'external' peak recorded last Friday on the way down.
Ordinarily I would suggest a 'mechanical' short on a rally to the green line (26.19), but there's something so unappealing about this pattern that I'm more inclined to get long, provided we can find a proper set-up to do so. It's not as though bears have shown much strength or enjoyed much success betting the 'don't pass' line. The 24.04 'D' downside target will remain theoretically viable nonetheless, but my hunch is that it will be negated this week with a push above C=26.91. ______ UPDATE (Aug 5, 10:52 p.m.): So far, my hunch has been wrong. Still, bears have no real power over Silver other than to bludgeon it do death for a couple of hours at a stretch, so I won't get too exercised yet about the prospect of a full-blown sell-off to D=24.04. That doesn't mean I am hankering to bottom-fish, however. ______ UPDATE (Aug 6, 10:34 a.m.): The futures have gotten pounded so hard today that the 24.04 downside target now looks very likely to be hit. Here's a chart for those who enjoy bottom-fishing. I like the odds.
The steep rally that occurred between March 2020 and August created an impulse leg with sufficient power that the likelihood of a second rally leg to as high as 40.085 should not be doubted. However, buyers' digestion pains have rankled us for nearly a year, and there can be no guarantees they will end any time soon. There is still a presumption nevertheless that the futures will achieve a minimum 30.95 (p) without stopping out the 'c' low of the bullish pattern. In the meantime, the best we can do is stake out a long position on the lesser charts when a good opportunity arises. That would allow us to keep half for a swing at the fences. _______ UPDATE (Jul 27, 9:17 p.m. ET): The gnarly pattern shown in this chart predicted the low precisely. But how long will it last? It took the futures six weeks to get there, so the bounce should be more than just an overnighter. If not, then the next logical step-down would be to 24.04, a Hidden Pivot support that can be bottom-fished in any of the usual ways, including with a bid and a very tight stop-loss.
Silver has lagged gold lately and may need to grope its way lower to find good footing. The chart shown is intended to exploit that scenario with an rABC set-up and a point 'c' low positioned at p=25.46. This Hidden Pivot support is nicely situated in a 'discomfort zone', since, if you look to the left, there are no prior lows that the hoi-polloi would be referencing for structural support. Because we're playing for a turn from p precisely, I've somewhat shortened the a-b interval of the reverse bullish-pattern. If you don't trade futures and prefer to use SLV, try a tightly stopped bid at 23.46, a midpoint support equivalent to the one in the futures chart. You could also use 'camouflage', call options or rABC to initiate the trade, but don't stick with it if it goes against you more than a little. _______ UPDATE (Jul 19, 6:14 p.m.): Sellers crushed the midpoint pivot at 25.46, negating our plan to position a point 'c' low there for an rABC buying set-up. A point 'a' anchored at 25.03, the intraday low, would have triggered a buy at 25.22, with p=25.41, but unless I hear from at least two subscribers who elected the trade, I won't provide tracking guidance. _______ UPDATE (Jul 22, 4:38): Buyers took out one internal peak and two 'externals' on the hourly chart, imply bulls are likely to dominate at least till Sunday evening.
You've got to admire the pluck the futures showed last week in repelling an assault by sellers that should have pushed the August contract down to at least p=25.69. That would have been a great place to attempt bottom-fishing, but the fact that we were denied the opportunity can and should be construed as bullish. Assuming the upthrust that ended the week starts the new one by taking out some minor 'external' peaks, we should be able to devise some 'mechanical' set-ups for some profitable rides higher as the futures bid fair to wreck the bearish pattern shown in the inset. Zoom the rightmost abc on the hourly chart down to the 15-minute chart or so (A=25.92 on 7/9 and at 9:00 a.m. ET) and you'll have your starter kit. This will be a high-odds trade for Sunday night-owls, since the competition, emerging from weekend lethargy, will not be looking for a buy signal quite this subtle. Here's a chart to help guide you. _____ UPDATE (Jul 12, 7:07 p.m. ET): The futures didn't dip low enough to trigger the trade, but an alert chat-room denizen flagged another that would have produced a $3000-or-more profit on four full-size contracts in a little more than two hours. Check his post at 10:19 a.m. to determine whether the opportunity would have suited you. ______ UPDATE (Jul 15, 5:55 p.m.): Silver is in an uptrend, although you'll need sensitive equipment to detect it. The pattern shown here, with a 27.15 target, looks very promising for trading and predicting. It already signaled a 'mechanical' entry on Wednesday that was worth a quick $6800 to anyone who bought four lots 'mechanically' on the 'textbook' pullback to the green line.
As usual, silver's chart is more encouraging than gold's, but not much. The impulse leg shown in the chart is legitimate, but we should want to see two further signs of health before we allow ourselves more encouragement. First, the spasmodic rally that tested bulls' patience on Friday needs to exceed the 'D' target at 26.77; then, with no pussyfooting, the futures must surge above the 27.36 'external' peak I've highlighted in the chart. Otherwise, expect more tedious ping-ponging between uninspired bulls and enfeebled bears. ______ UPDATE (Jul 8, 10:35 p.m.): This one is for rABC-savvy traders only, since I am not about to advertise its proprietary details explicitly. Suffice it to say, p=25.69 in this chart is ideally situated in the discomfort zone to set up an rABC long that I rate '7.9'. Try a=25.94 (7/8 at 3:00 a.m.), and don't hesitate to give it a second try if you get stopped out. ______ UPDATE (Jul 9, 8:18 a.m.): So far no trade,, since the futures must come down to at least 25.70 to enable the rABC set-up noted above. The potential opportunity remains viable.
Bulls easily exceeded the 17.020 pivot we'd been using as a rally target, so I've redrawn the pattern to produce a new one at 17.545. Given the high quality of the pattern, it should show potentially tradeable stopping power. You can use a corresponding target in SIL to get short via an ETF, but I would suggest a very tight stop-loss regardless of what vehicle you choose. The pivot demands our attention, since it is such a logical spot for a correction. _______ UPDATE (Aug 13, 8:03 a.m.): Today's roller-coaster ride peaked a nickel from the 17.545 target given above. It remains valid in theory, but in practice we'll put it aside and focus on the retracement. If the 16.510 low of the swoon holds, the next rally could hit 17.970 (60-min, A=15.070 on 7/12. _______UPDATE (Aug 14, 9:45 p.m.): So far so good. Not only have the futures rallied sharply from the 16.510 low, they are moving tonight above the 17.240 midpoint resistance associated with the 17.970 target. _______ UPDATE (Aug 17, 2:45 p.m.): Although I am removing this tout form the home page, I will track Silver futures on request in the Trading Room.
The futures came down hard Friday, but only after they'd rallied sharply above the 16.555 'hidden' resistance I'd proffered as a minimum upside objective. The September contract has used up all of the Hidden Pivot targets that can be derived from the daily chart, so I've switched to the weekly chart for a longer-term perspective. It yields a target at 20.985 that lies 30% above these levels, but also a midpoint Hidden Pivot at 17.423 than can serve as a minimum objective for now. If it is easily exceeded, that would shorten the odds of a further push to 20.985. These numbers are not exact because the pattern from which they were derived is a composite of highs and lows from various contract months going back more than three years. Also, the A-B impulse leg is weaker than we would have preferred, since it failed to get past the series of 'external' peaks recorded in 2013-14. This makes a move into the low 20s less than the near-certainty it would have been if 2016's move off the launching pad had been stronger. _______ UPDATE (Jul 31, 10:00 p.m.): It's unlikely sellers are spent, since the futures have breached a clear downside target at 16.170 this evening (30-min, A=16.640 on 7/30 at 3:30 p.m.). _______ UPDATE (Aug 1, 6:50 p.m.): Buyers generated a minor impulse leg, but they'll need to push the futures above 16.478 to put the 17.020 rally target of this pattern in play.
