The chart says SLV (the US unleveraged silver trading ETF) is now trading in a range between 15.60 and 16.20, roughly. This is about a normal range-size for SLV; earlier ranges were generally 60 cents or 30 cents wide. What is nice about this chart is that green-candle days happened with high volume, as shown in the bottom section of the chart.
What you want to see for an upward move to continue is the green volume bars are consistently higher than the red volume bars. This is the simplest way to judge buying sentiment from a chart, and while there are many more sophisticated measurements they all depend on this very basic measure.
So until we start to see bigger red volume candles than green volume candles, we have to believe that silver will keep going up. Or at the very least, that it won’t fall back much.
As far as falling back, take a look at the tall red price candlestick from Tuesday (the second one in from the right, in the top section of the chart). Notice how price fell out of the range during the day but recovered to close just about mid-range. These “tests” are important, but we don’t get too excited about them until the daily close happens outside of the range. Closing above the range may mean an upside break – hurray if you’re long! Or, possibly a good place for a risk-reward trade.
Closes below the range can indicate the start of a downward move. If the price doesn’t recover in the next 2 days to close back up in the range, you can expect prices to fall.
Sometimes it really is just that simple.
The Gold Enthusiast
DISCLAIMER: The author has no position in any security mentioned in the article. The author is long the silver sector via small positions in PAAS, SVBL, and USLV. He may sell the USLV position if SLV closes below 15.60 for reasons discussed in this article, but has no intentions of trading the other positions in the next 48 hours.
The iShares Silver Trust (SLV) was trading at $16.08 per share on Thursday morning, down $0.00 (0.00%). Year-to-date, SLV has gained 0.56%, versus a 7.29% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of ETFDailyNews.com.
About the Author: Mike Hammer
For 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.