Silver Drops After Bearish Price Action Setup Develops
Last session we seen most of the major currencies weaken while the yen gained some strength. No outstanding price action that stands out on any of the currency pairs. The Silver chart is on the hot seat today, producing a bearish signal off a swing level. We call it a swing level because it’s a level that previously acted as support, now turned resistance.
Silver has basically stalled after a strong rally, which was in a holding pattern above the swing level while it was acting as support. Once the support level was breached, a re-test of the level from the underside showed us price action traders the silver market was respecting the level as new resistance. This price action generated a bearish rejection candle which we could see much lower prices develop from.
The bearish price action setup we covered recently has played out nicely. There was a test of discipline as the market retraced back up the signal candle during the next two trading sessions. But, for those who didn’t fiddle with their stop loss would have been rewarded. I always discourage traders from ‘adjusting’ stop loss levels for this exact reason.
This trade return our standard 1:3 reward, which flags this trade as a success. For those who held on a bit longer so far had a potential to reach a 5x return. A new bearish price action trade opportunity has presented itself at the end of this week’s trading. Friday’s daily candle closed as a bearish rejection candle which a nice negative close in the body.
This signal would have been more ideal if it formed a little closer to the mean, but it does line up nicely with the overall downward momentum in the market. Retracement entries could be used here, but the better confirmation will come from a breakout of the low’s of the Rejection Candle.
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