The futures are on a reverse-pattern buy signal triggered nearly three weeks ago at the green line (x=23.06). They haven't done much since, other than disappoint, but the signal remains valid nonetheless until such time as the March contract drops below C=22.04. My gut feeling is that the trade will work, delivering at least a one-level ride to p=22.08. However, I'd be tempted to try again with a tighter reverse pattern if sellers should stop out C. A voodoo number sits about 30 points below it and could be useful for those inclined to trade this vehicle and who are familiar with voodoo set-ups.
Last week's rally to the green line (x=23.15) generated an enticing signal to get 'mechanically' short, but it went unanswered because silver hasn't exactly been a hot discussion topic in the chat rooms. 'Spartacus' offered a link to an ostensibly bullish chart, but only tentatively so. The chart shown in the inset had more immediate consequences, but it remains to be seen whether the so-far one-level move finds its way down to the 'D' target at 21.45. I doubt it, but a further fall to at least p2=22.02 is neither illogical nor unlikely.
Last Thursday's pop to the green line (x=23.154) triggered a very promising 'mechanical' short, by which I mean to imply that the pullback from it has about an 80% chance of coming down to at least the red line (p=22.58) where partial profit-taking would be warranted. I missed the signal because I was focused on a pattern with a lower point 'A' high that needed a run-up to x=23.295 to trigger the short. We'll respect the signal in any case, starting the week with a bearish bias and a theoretical downside target at D=21.455.
Although Feb Gold had the decency to leave us with a little hope, Silver is not being so kind. Its clean destruction of the midpoint pivot (p=22.868) leaves little room for doubt about whether the weakness of the last month will continue on down to the 22.01 target shown. In the meantime, we should plan to get short on a blip to the green line (x=23.295), since the 'mechanical' aspects of the trade look promising. The pattern may also be gnarly enough to use D=22.015 for bottom-fishing.
Silver took a dump after triggering what had looked like a promising 'mechanical' buy at 23.80, the green line. Its February Gold counterpart has held up better and appears primed for a rally to a profit-taking level at 2086, about 35 dollars above Friday's close. Is Silver's recalcitrance a bearish divergence? I doubt it. It is probably just a variation on an all-too- familiar theme of jerking everyone's chain whenever possible. Let's cross our fingers and hope silver plays catch-up with gold in the week ahead.
Silver futures fared worse than their gold counterpart last week, leaving a 'mechanical' buy triggered on December 29 hanging by a thread. The weekly low at 22.888 came within a dime of stopping out the trade, which I did not recommend. There is a voodoo number not far below the pattern's point 'C' low where bottom-fishing could be attempted with relatively little risk, but we'll nature take its course before we hatch any bullish plans.
Friday's selloff early in the session put Silver a tradable step ahead of Feb Gold, since it triggered a 'mechanical' buy at the green line (x=23.80) that has yet to occur in gold. There are no guarantees that the theoretically profitable bounce that occurred subsequently will keep on going, but the bullish signal would remain viable nonetheless, even if the futures slip beneath 23.80. The signal offers no assurance of a further move to D=26.86, only the likelihood of a profitable one-level move from x to p.
I've synched up Silver's chart with Gold's to show that the former is slightly outperforming the latter, leading the way, as it were. Last week's penetration of the midpoint Hidden Pivot at 24.70 was not sufficiently impressive to make further progress to D=26.62 a surefire bet, but at least it's a start. Similarly to gold, a pullback to the green line at 23,744, especially early in the week, would signal an attractive 'mechanical' buy. We may be able to improvise on-the-fly, however, if there is not enough weakness to bring the futures down to our niggardly bid.
Silver has pulled out of a steep dive that retraced more than 80% of the rally begun in mid-November from 22.26. We are likely to know soon whether the reversal is capable of achieving the 26.865 target shown, since a crucial resistance lies just above in the form of a Hidden Pivot midpoint resistance at 24.82, As always, an easy penetration of this obstacle, or better yet two consecutively weekly closes above it, would suggest bulls are back in charge. This seems very likely because the impulse leg that drove the futures to their most recent high at 26.34 surpassed two 'external' peaks and one 'internal' without taking a breather.
As Silver plummeted on Friday, few subscribers would have been focused on the green line, where the March contract will become an all-but-obligatory 'mechanical' buy. Such trades are not supposed to leave one feeling comfortable, and this one would surely qualify as menacing. Note, however, that the implication is not that the futures will necessarily achieve D=27.16 after touching x=22.67, only that they are more like to bounce to p=24.16 than to fall first below C=21.17. We can manage the risk of this opportunity with a smidgen of 'camouflage if it materializes', so please nudge me in the chat room if you're actively engaged. ______ UPDATE (Dec 13, 11:11 p.m.): No one nudged me, but DaBoyz goosed the March contract $1.34 off a 22.78 low that missed touching my green-line 'launching pad' by 12 cents. Our attention is now on this very tradable pattern, with a 25.47 D target. The slight overshoot of p=24.13 implies that D is no worse than an even bet to be reached.
