Forex Trade Signals and Setups Oct. 25th
Silver – Up 10% in Last 5 Days
Silver is finally starting to wake up from its hibernation as of late. It has been stuck in a paultry $29 – $33 range lately, however, we have started to see some some strong bullish price action climbing $1.50 in the last 8hrs. This should not be surprising silver has taken so long to start to become active. Why?
Well, when the CME comes out of nowhere and hikes up margins over 18% (4th time since May 3rd this year), this tends to scare speculators, especially those with paper contracts on the shiny metal. This caused the massive dive we all saw from $40 to $26 in a heartbeat. So what does this have to do with the current picture?
Bottoms take longer to play out than tops, and we have literally spent the last 30 days bottoming after the touchdown off the lows of $26. Since then, price has formed two small ranges, the first between $29 and $31.50 and the most recent range between $30 and $33. What is interesting is how price action has been lumbering around for a while. But in the last 8hrs, as noted above, price has gotten rather jumpy and looked the most alive in weeks suggesting an increase in market participation and more importantly, more confidence from the bulls.
We suspect $32 to hold any downside (worst case $30) and an eventual upside break of the key resistance at $33.50 which has held the upside since the end of Sept. Once this breaks, we expect a quick move to $35 and likely back up to $39.50 shortly after. Honestly, we are suspecting a major upside break in silver which could be the beginning of a massive upside run and will look for dips as buying opportunities, especially buying physical.
DJIA – Breaks 75 Day High
After being contained by the former support turned resistance at 11721, the index has finally broken this medium term ceiling with impressive fashion closing above it and climbing the next day to the 3mos highs at 11931. However, today has seen some relatively strong selling dropping 200pts in the process. To land where? Exactly at this major support level at 11721. This is a classic breakout retest setup. If the market really is bullish, this level should hold and provide an impetus for traders to get back in long. If it fails, then we expect a move back to 11500 before new buyers come back in from the failed breakout. The answer should come at the earliest tomorrow and latest this Friday.
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Also make sure to check out this great video on understanding Price Action.