That is what I was saying earlier about giving it some time to short itself out. I've posted a silver chart and basically I think this is a dangerous time to try and trade it. Just go to sleep until after Friday's close and see what's what. The manipulators can do what they want in here.
Though i painted some orange dots up to 37.50 before going down that's only for fun. Basically, I feel it must form a low before going long.
(One could go short IF it fails around 37.50 and starts to fall, but very risky.)
I understand how that exchange would be confusing. In my case i have been swing trading a physical bullion account. On the way down from 49.50 sold perfectly at the top, was sitting pretty for a moment, then went long again about $41.00, thinking the slide was done. Caught on the wrong side of a melt down, i reversed, sold further on down, almost PERFECTLY at the bottom of the bounce lol.. Fortunately, the price dropped today to below my exit, and i re-entered (twice in two lots) the last trade at the price bottom, while keeping about 3/5th my powder dry. Miraculously i didn't lose, but i messed up a good play by choking. Now, if the price rises, i risk being squeezed out (again). If price continues the correction, as i hope, then i'm positioned to re-enter. I've been swing trading for the last several months, and this is the first trade i've really botched up. Live and learn.
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Yes, indeed it helps (a lot). I really like and absorb your guys thoughts and your thinking based on charting. In my trading perception, i am highly subject to the economic analysis. I see the price movements as being influenced by a mix of things. A good analogy would be a vessel in a cross-current, with a wave motion coming from yet another direction to the running sea, and at the same time, a wind blowing in from a third direction, with the occasional tornado passing by, and maybe steering with a bent rudder. I'm fascinated by the charts, and do not deny their influence on me. I try to trade within the context of the chart, using it as a framework to avoid making mistakes. However, taking the example of gold, where firm is my belief the battle is being fought by giants, and not by the class below (not yet), charting is hard to reconcile as effectual in such things as boundary conditions (bollinger etc). On that note, I think the sovereigns are engaged in a very serious war (call me crazy) that goes way beyond charting and indicators. For what its worth, i think this is a VERY special time, a once in say three century opportunity to participate on the sidelines in a do-or-die financial battle between world powers, and take a few crumbs off the table. Something to tell your grandchildren about.
Last edited by Donald; May 12th, 2011 at 12:45 AM.
A few thoughts on silver. I've been studying charts of some previous blow-off tops in the commodity space. There have been a few in recent years: Wheat 2008, Soybeans 2008, Copper 2006, Corn 2008. Crude oil 2008 is another possible example, although it never got quite as parabolic as some of the others.
Once these blow-off tops start to unwind, it's a pretty good bet that they'll hit the 200-day moving average. Often they bust right down through the 200-day and continue into a full-fledged downtrend. Sometimes they do not. Copper 2006 had a pretty steep correction and then righted itself before hitting the 200-day.
The 200 day for silver is currently around 28-29 so that's one potential target.
Stepping away from the technicals, the bigger question here is whether the QE2 trade is unwinding. The "short dollar / long commodities" trade got very crowded as that was the "obvious" play ever since Bernanke's first hints about QE2 in late summer of last year. If and when the money flows back out of that trade, then the patterns we've all grown used to over that period fly out the window and we'll be dealing with a different paradigm. No more "buy the f...ing dip" in the various inflation plays.
I had thought the QE2 trade would barrel forward into June at least, but maybe the unwind is starting early. If that's the case then silver, gold, and the other beneficiaries of the QE2 trade are the last place you'd want to be long, at least until the dust settles. The other million dollar question is where that money will go instead; probably some place that isn't at all obvious at the moment.
The alternative is that this is not the beginning of the unwinding of the QE2 trade, but rather a severe "headfake" that will shake out the weak hands before the trade continues to march on. That's possible but I think the steepness of this correction suggests otherwise.
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