Silver, The Big Short?
A commodity that seems to respect key levels, very, very well is silver. Looking at the higher time frames inwards, you can see how well this has played out. Silver is almost a traders dream, when it goes in your favour it really goes, tending to consolidate then run, consolidate then run etc.
From the higher time frames, we have respected $16.25 per ounce very nicely, acting as great monthly and weekly resistance showing two clear rejections off this level. The daily and 4 hourly are also adding to our confluences of further downside to this commodity. Price has rejected very nicely off $16.25 which is our monthly/weekly resistance, our daily resistance comes in at $15.52/$15.35 which is a nice zone region, highlighted below. Going into the hourly chart, we can see a lovely head and shoulders pattern unfolding in front of us, the pullback on our right shoulder did carry a lot of momentum with it, but this is to be expected within this commodity. At our current right shoulder, there seem's to be multiple confluences lining up. The slowdown of momentum, rejection off fib level, rejection of our resistance zone and bearish candlestick formations. Taking all these factors into consideration, a nice 4-hour rejection off this level and we could look to execute a short position. The first target could be at our next support level, which is seen at $15.00, target 2 which is seen at $14.00 per ounce is our longer-term target and giving us great risk to reward on the setup.
A nice strong daily close above our highlighted zone at $15.52/$15.35 and this trade would be invalid. Be on the lookout for further negative confluences on this commodity, as it could be shaping up for a nice short opportunity....