luke1827
Long

Going for Bullseye | Long Silver | Target AB=CD

FX:XAGUSD   Silver/U.S. Dollar
Update: Stopped at Entry. See comments
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Fellow Risk Takers and Speculators,

NFP #s came out stronger than expected and cause a downward move in Silver             and Gold             . Price action caught support at the 61.8% fib retracement level of the previous swing from $15.49 to $18.45. What is key here is that this downward price move was mainly driven through the futures market (COMEX Gold             and Silver             ). My speculation is that the physical market will find strong bids here and will unwind some of the futures driven price drop.

From a technical basis:

1. Trendlines | We have clear indication that the upsloping channel has caught much for the price action moves, the green circles drawn on the chart show the number of times the channel slope has caught the price action and price finds support or resistance at those points. In the recent move down, we see that price has caught support at the channel floor drawn in with a thick blue up-sloping trendline. I'm looking for prices to stay above this level.

2. Fibonacci Ratios | The 61.8% fib retracement level from the recent swing found support at $16.619 as shown on the chart. This again, acts as support and I'm looking for prices to stay above this level.

3. Fibonacci Extensions or AB=CD | If prices do stay above the support levels indicated by the two points above, we can use a fibonacci extension or AB=CD price movement to forecast possible take profit targets. The first target I'm looking at is based on the 61.8% extension of the major swing from $14 to $18.45. The completion of AB=CD would mark my second target at $21.

Looking for a high reward-to-risk trade here and going for bullseye!

Entry: 16.62
Stop Loss: 16.49
TP1: 19.3
TP2: 21

All the best

Luke
dp
2 years ago
Nice view, Luke!

One educational point is unclear to me ...

Classics (Pesavento et al.) say that ABCD extensions are more than 1, like 1.618 etc.

You are talking about 0.618 extension, which mean that CD shot is shorter than AB. Do you often see it? Any references to that?

Am I understanding it right?
Reply
luke1827 PRO dp
2 years ago
Hi dp,

Thanks for liking the idea.

From the more modern (and probably more experimental) literature, e.g., Connie Brown on market geometry/fib ratios, Several authors on harmonics, etc., and more importantly from my experience in what I've seen in price movements, the .618 level of the CD extension tends to act as a Pivot point. Think of it as a price level that tends to attract attention of market participants where price levels either finds a pause at the level and retraces or consolidates and moves further towards the completion of AB=CD.

Here's a old example I pulled up from my USDILS chart I posted in November.

snapshot


Note how price actions catches the .618 red line.

Personally, I tend to look most at:

.618
1
1.414
1.618

Hope this helps.
Reply
luke1827 PRO luke1827
2 years ago
Here's another example from my crude oil chart

Note the key levels I watch:

snapshot


Try out these price extension ratios on your own charts and let me know if you see price action finding pivots along these levels.

All the best

Luke
Reply
luke1827 PRO
2 years ago
Update - 9 Feb 2:23pm (GMT +8)

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Fellow precious metals traders,

From a market sentiment perspective:

1. It is always important to watch the price movements of precious metals during the London open (8am London Time) and during the 2 Gold Fix timings (10:30am London Time and 3:00pm London Time).

2. Last Friday's price drop after strong NFP #s had broken through the previous low of $16.724 but did not find momentum to continue downwards past $16.5 despite stops being flushed. This gave reason to speculate on bullish sentiments in the market.

3. Building on this, we need to see price gain upward traction from the London open till the AM Gold Fix, it is during this time that the physical markets get busy and we need to see a push upwards in prices. If not, I will be considering taking 1/2 position profit, and leaving the rest of the position to run. I might consider moving stop loss to entry as well.

Keep you guys posted.

Luke
Reply
luke1827 PRO luke1827
2 years ago
Update - 9 Feb 5:23pm (GMT + 8)

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Market sentiment looking good here.

Conservative traders can take 1/2 position profit here @ $17. Leave stop loss in place and essentially you have a free trade to ride out.
Reply
luke1827 PRO
2 years ago
Update - 9 Feb 6:33pm (GMT + 8)

--------------

Strong buying before Gold A.M. Fix - Market sentiment seems strong

snapshot
Reply
dp luke1827
2 years ago
Thanks Luke, very interesting observation. Could retrace from 1.618 ABCD to 16.7 though/
Reply
luke1827 PRO dp
2 years ago
snapshot


I presume this is what you see?
Reply
dp luke1827
2 years ago
Exactly :)
Reply
luke1827 PRO dp
2 years ago
On that note, look at .618 and 1.414 level price action
Reply
luke1827 PRO
2 years ago
Update - 10 Feb 9:57pm (GMT +8)

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Fellow traders,

We have support found on both the red downtrendling line and the blue uptrending line highlighted with the green circle. Let's see price stays above support.

snapshot
Reply
Yahia.Awes luke1827
2 years ago
Thanks for updating your chart, hopefully we can go bullish!!
Reply
luke1827 PRO
2 years ago
Update - 11 Feb 2:47pm (GMT +8)

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Fellow Traders,

Here is a speculative Andrew's Pitchfork that I am watching. This fork is not validated yet but seems to catch some of the price action. Will watch for more to determine if it captures the slope, support and resistance of the price action.

snapshot


Also, note the 1.618 extension of a smaller AB=CD extension providing resistance. This level, $17.09, needs to be taken out to open up an accelerated upside move.

If not, it would be prudent to close partial position in profit.
Reply
Yahia.Awes luke1827
2 years ago
Hello Luke have you got an update for us?
Reply
luke1827 PRO
2 years ago
Glad you asked Racks :)

Update - 13 Feb 1:13am (GMT + 8)

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The market's reaction to the slew of poor US news releases earlier was small. It seems that investors are getting used to the constant misses in economic data. I had expected Gold and Silver to hold its gains after news but it seems that the market is still uncertain.

From a technical basis:
snapshot


We had a bounce off the downsloping red trendline AND the 61.8 fib level retracement at $16.62 which coincided with our entry point of the trade. We need to see price stay above the blue upsloping trendline. If that trendline becomes resistance, it indicates a move DOWNWARD which would stop us out.

If we look at the Gold Daily chart, it had bounced off an RSI: 40 support level, which similarly it needs to stay above to maintain a bullish outlook.

For more conservative traders, you can choose to set your stop loss to entry and re-enter the market once bullish signals have been confirmed and we break past the $17.1 level again.
Reply
Yahia.Awes luke1827
2 years ago
Thanks for the update!
Reply
luke1827 PRO
2 years ago
Update - 14 Feb 2:01am (GMT + 8)

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$17.1 has broken through and we have an accelerated move upwards. Encountering short term resistance at the R1 pivot level as shown on chart below. Precise tap seen.

snapshot


I am moving stop loss to entry now.
Reply
luke1827 PRO
2 years ago
Fellow traders,

Note how Silver is showing strength and that Gold is lagging behind Silver. This is the opposite of what happened throughout August to November 2014 where Silver lagged behind Gold, taking larger price moves downward.

My speculation is that the Gold/Silver ratio might be unwinding a little with Silver showing relative strength over Gold.

I would choose to buy into strength than to buy into weakness. For me, the LONG silver trade exhibits better probabilities in the near term than the LONG gold trade given the price moves seen over the past week.

Luke
Reply
luke1827 PRO
2 years ago
Update - 17 Feb 6:56pm (GMT + 8)

-----------------------------

Fellow Traders,

Previous support along the blue trendline seems to be acting as resistance now.

snapshot


This is an ominous sign and if price cannot break back above the blue trendline, we should be expecting a move downwards. My stop loss has been moved to entry as of 14 Feb and will continue to leave it there.

Luke
Reply
luke1827 PRO luke1827
2 years ago
Silver stopped at entry.
Reply
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