Forex Price Action – Silver forms Strong Breakout Bar, More Upside? Aug. 20th
Silver
Being the little brother of the precious metals (to Gold that is), Silver broke the stalemate (and malaise) as it broke and closed above the key $28.36 resistance level. And she arrived – doing so in impressive fashion with a strong breakout bar and good follow through, suggesting likely continuation. You can see further details of this with the strong close on the breakout bar, along with the no wick on the following bar, communicating the metal was bought from the open.
As you can see, there was also plenty of pre-breakout pressure or tension building up with the higher lows, along with the recent price action squeeze and consolidation holding above the 20ema, just before the final push.
However, we have to be cautious before bulls uncork the champagne, for even though it crossed the short term marginot line at $28.36, which has not seen a daily close above this since June 19th, the weekly 20ema is just ahead, which was today’s high. Silver has not closed above this since March 9th this year, so you can bet there are probably some bearish models considering selling here.
Should the precious metal close above this weekly 20ema, expect further upside and new long term models to get long. Intraday traders can wait for pullbacks to the prior resistance level which now becomes support for a possible breakout pullback setup.
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Global Market Commentary:
For most people needing a nap, today was a good day as the markets pretty much trotted in place and the big winner in the US indices was the Dow losing a Whopping 3.56pts. Most of the volatility potential was taken out as the ECB quelled speculation about more intervention to save the EZ debt issues (as if printing solved that in the past).
This was due to the Der Spiegel article suggesting it (the ECB) was considering buying debt issued by Spain and Italy should the rates hit untenable levels. Of course the Bundesbank reminded people of its opposition to bond purchases (considering none of the countries have met their obligations yet).
The main winners on the day was Apple which touched the mark of the beast hitting $666 before closing just below it at $665.60. Also, Gold gained solidly (under-performing v. Silver) adding $3.80 while Oil pulled back to the crucial $95.32 level before bouncing to close at $95.92, down $.09 on the day.
Upcoming Economic Announcements:
| AUD Reserve Bank Board – August Minutes | 01.30GMT | 21.30EST |
| NZD Reserve Bank of New Zealand 2-Year Inflation Expectation | 03.00GMT | 23.00EST |
| GBP Public Sector Net Borrowing (Pounds) | 08.30GMT | 04.3EST |
| JPY Adjusted Merchandise Trade Balance (Yen) | 23.50GMT | 19.50EST |
That is simply beautiful… I love that tight congestion before a breakout – (I generally don’t trade breakouts though) only on daily charts for stocks, but that is exactly what I look for, gives a tight stop and high R:R
Hi Chris, want to ask you how such a big breakout can happen when we are in times of low volatility as everybody say, doesn’t need alot of participation ?
Thank you
Good Question Nikos,
When there is low volatility, in some ways its almost easier as there are less players offering resistance, so only takes a decent push.
But this was to be expected if you can learn to read the price action well.
Kind Regards,
Chris
Thank you Chris to tell you the truth i miss thsat but was easy to follow gold breakout next day.
Regards