SLV on Deck

Here's the link to last week's coverage of SLV


Time to take another look.

 Here's the bigger picture of SLV going stagnant late last year and forming a top. Obviously the top broke down, but as usual, these patterns are likely to see some sort of manipulation to shake traders out. Recently the bounce has wedged which is bearish even though it is rising and it also appears that there has been a breakout from the wedge to the upside (in technical analysis this would be considered a failed pattern, but it's really just how the introduction of a technology arms race among trading firms and historically low liquidity has played out to take advantage of traders who are stubbornly indoctrinated in the out-dated precepts of technical analysis). This breakout of the wedge could and probably is functioning as the head-fake shakeout which causes shorts to cover, bulls to buy and eventually the pattern plays out and next the longs have to see. Al in all, the HFT firms are making money in several different ways on one false breakout, the snowball effect of traders being shaken out of the trade helps momentum on the reversal.
 

 60 min 3C hasn't kept up with price so there's no confirmation of the strength of this bounce.

 The same is true of this 15 min. chart.

There are a couple of different entries possible here and I like the trade here for the reason of lower risk/higher probabilities. The first way is to jump right in, in that case I'd say use a stop that you see at the red arrow, above $30.44. The next option is to go short now with a tighter stop at the red box around $30.25 or so. The 3rd possibility is to wait for price confirmation, thereby increasing your odds of a winning trade, but giving up a few percentage points. In this case, I'd stick with the stop around $30.25. Last you could phase into the trade with a combination of any of these entries.

Should we see a higher high/higher low tomorrow, then the limit orders/stops change a bit. Feel free to email me with any questions.