Apr 272011

Silver's sharp decline after hitting a multi-decade high warrants close attention.

Silver- Daily Charts

The daily chart of silver above marks the "long-legged doji" which is a key warning of sign of an impending reversal. Moreover this pattern (a) has occurred after a prolonged and parabolic rise in silver (b) has seen follow through selling on very heavy volumes and (c) has faced resistance at the 1980 highs. These are mouth-watering signs for much lower prices for silver.

However I will probe this set up with a very small short trade - the Dollar Index has shown no signs of reversal and is merely consolidating near the lows. Unless the green-back turns up this might turn out to be just a fleeting drop in an up-trend.

  8 Responses to “Silver looks toppy but Dollar Index needs to bottom”

  1. Hi,

    Could the high volumes be because of compulsory squaring off of long positons because of margin calls. Also new short postions were generated. Subsequently Silver has bounced back sharply from the lows and is testing the highs again. What now? Sell now with some sort of stoploss above the 1980s high or something? Or wait? If it does not make a new high then it should come to test the previous low? At this level the stoploss is quite close. Or has the chart or other indicators signalled a continuation of the upward move, in which case there is no point. Do enlighten. 🙂


    • Hi Agile,

      How I would approach this set up is underlined in the 2nd paragraph. Anything more I say can be interpreted as investment advice – so I cannot say anything more here 🙂 Your question itself tells me you know what you should do.


  2. Agree with you Jai.

    Must say, along with Dollar, Equities (especially) in Emerging markets and India are looking shaky.

    Downside risk have increased considerably.


  3. hello sir according to your view more from 50$ to 39$ this morning

    • Hi Zubair,

      The important thing was to pull the trigger on the trade 🙂 with risk control measures in place.

      Best regards,

  4. pulled the trigger at 48$

  5. thank you sir

    • No need to thank me Zubair 🙂 Pulling the trigger on someone else’s opinion is never easy. Enjoy the ride.

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