Silver continues the sideways chop, and from a trading standpoint with this being the case there has been little price action to take a bite out of. It can make for frustrating trading, so the best thing to do is to make what is often times the best trade – no trade. But this doesn’t mean stop watching and let your guard down, because these sideways chops do turn into extended moves at some point.
Friday, it was noted that the price action in silver was ‘shape-shifting’; that is to say it has been taking on different patterns but never convincingly breaking any of them. Triangles/wedges and even an inverse head-and-shoulders pattern showed themselves, but none came to the point of execution.
The only pattern which has remained a constant is the downward sloping channel visible on the intra-day time-frames (1 to 4-hr chart). The gradual decline of the channel, given the prevailing upward trend prior to this period of daily chop, suggests the channel will resolve itself to the upside. But, until it breaks above the upper parallel we cannot make that assumption just yet; silver could just continue to slowly drift lower within the confines of the channel. And even if the channel is broken, a broader daily range could be continuing itself. With that said, we need to be nimble with any action taken at this time.
The most significant areas of support and resistance within the range is ~19.45/21 and 20.66/21.11, respectively.
Silver (XAGUSD) 2-hr
(Click on image to enlarge)
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