Top Story

Silver wins the Gold for Biggest Loser

Silver closed down almost 3.5% today near 17.50 as it continued its selloff from the blow off top at 19.62.  The precious metal is down nearly 10% since September 4th

Source: Tradingview, FOREX.com

Silver had been in an uptrend since mid-June.  On August 27th, silver opened at 17.63 and began rising towards the top of the channel trendline.  Once it broke the rising trendline, it rapidly moved to 19.60 on September 4th.  Silver opened on September 5th and reversed, selling off just as quickly as it bid up.   This is called a blow-off top and many times occurs because of FOMO (fear of missing out).  It then moved lower into the rising channel, thus creating a false breakout.  Many times, if a false breakout occurs on one side of the channel, price tests the other side of the channel, which is what happened here.  Today, price broke below the channel and closed near 17.50.   Interestingly, the move higher from 17.60 to 19.60 took 7 trading days.  The selloff from those highs back to todays 17.50 area took 7 trading days.   This entire move was extremely symmetric. 

Silver has pulled back to the 38.2% retracement level from the lows on May 27th to the highs on September 4th.  It now sits in a large support range between 16.50 and 17.50.

On a daily chart, the Gold/Silver ratio put in an AB=CD move.  Price overshot the target with the breakout of Silver and has since reversed, running into previous support (which now acts as resistance) near 85.50.  The next strong resistance level comes in between 87.50 and 88.30.

Source: Tradingview, FOREX.com

On a 240-minute chart, the gold/silver ratio has put in an inverted head and shoulders pattern and has broken the neckline today.  To get the target for this formation, take the distance from the neckline to the head, and add it to the breakout level.  The target is near 88.30.

Source: Tradingview, FOREX.com

If the Gold/Silver ratio were to reach the 88.30 level:

1)      Gold would have to move higher at a faster pace than Silver

Or

2)      Silver would have to drop at a faster pace than Gold (as it has been doing)

Watch over the next few trading days for the possibility of Silver to continue moving lower toward the lower end of support zone at 16.50, which could also push the Gold/Silver ratio higher.  Resistance in Silver comes in at September 10th low near 17.75.


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account