Is this Silver breakout for real?

2023年11月24日

One of the most widely discussed precious metals that has been a sleeper all year (-2.5 %) looks like it is finally waking up again. Silver futures have oftentimes been at the forefront of controversy after multiple failed short squeezes and a series of lower highs and lower lows. Traders often remember the good old days when prices exploded to $50 only to see prices erode to bargain basement prices at $11.76 during the 2020 Covid pandemic. Traders will want to use these two points of reference and draw a wedge pattern that leads us to where we are today, attacking the upper boundary line.

Looking at the Silver Chart

Silver has delivered a near-perfect breakout, with prices consolidating at the 200 DMA at $23.79 and could extend to the $25 level (August highs). Traders will want to use $23.25 as their first significant level of support, followed by the 50 DMA at $22.91 and $22.45 as your trend reversal point.

Potential Chinese Stimulus

We expect that once an economic recovery occurs in China, futures will again test $28-30. Given the sharp rise in prices this week, we recommend not chasing this rally and waiting for prices to trade back into the low 23s before gaining exposure. Advanced traders could consider using short-dated call options to maintain exposure.

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Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.

Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.