FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
99,710,759Confirmed
2,137,559Deaths
71,683,987Recovered
Fetching Location Data…
Advertisement
Advertisement
Chris Vermeulen
Silver

Heading into what will likely become one of the biggest events in American political history on November 3, the US stock markets are holding up quite well on Monday, November 2.  My team and I have published a number of articles recently suggesting we believe wild price swings and increased volatility is to be expected before and after the US elections.  We have even suggested a couple of stock trades that we believe should do fairly well 60+ days after the elections are complete.  Right now, we want to bring your attention to the Silver Junior Miners ETF (SILJ).

The current Pennant/Flag formation that is setting up in SILJ on the following Monthly chart has peaked our attention.  Diminishing volume and moderately strong support above the $12 price level suggest key resistance near $15.05 will likely be retested as metals and miners continue to attract safe-haven capital after the elections.  The Apex of the Pennant/Flag formation appears to be nearly complete – a breakout or breakdown move is pending.  We believe the uncertainty of the elections will prompt a possible breakout (upside) price trend in the near future.

Advertisement
Know where Silver is headed? Take advantage now with 

75% of retail CFD investors lose money

When we apply a Fibonacci price extension (100% measured move) to the rally from the COVID-19 lows to the recent highs and extend that range from the September 2020 lows, we can identify a $20.35 and $25.32 upside price target for any potential breakout move.

The key to understanding the potential of this setup is to ask yourself if you believe an increased wave of fear and uncertainty will exist shortly after the US elections and to ask yourself if the renewed surge in COVID-19 cases will drive investors away from stocks and into safe-haven investments?  If you believe this is true, then metals and miners should be on your radar.

One thing we would like to make very clear to you is that metals and miners tend to contract as stock markets collapse.  This is an impulse contraction in price because of risks and fear, but it is very real.  From July 2018 to June 2019, SILJ contracted almost 40%.  This is an important risk component to consider when reviewing the current setup in SILJ.  In July through August 2018, the price of silver was kept down given that that the US Federal Reserve continued to raise interest rates – eventually prompting a -20% price collapse in the SPY starting near October 1, 2018.  SILJ lead this move lower and didn’t actually bottom until June 2019 – when the SPY had recovered to near all-time highs. Thus, this setup in SILJ does include a fairly strong measure of risk for any moderate downside move if the markets fall precipitously after the US elections.

This Weekly SILJ chart, below, highlights what we believe is a clear breakout resistance level near $15.05.  Our research team believes that this critical resistance level, once breached, will likely prompt a moderately strong upside price trend in SILJ.  Failure to breach this level will likely result in a continued flagging price formation attempting to retest the $11.00 support levels.

Please review the data we’ve provided within this research post before making any decisions.  There is a moderately high degree of risk associated with this current Pennant/Flag setup.  Having said that, we do believe that a breakout or breakdown move is very close to initiating and we believe the critical level to the upside is the $15.05 resistance level.  Traders should understand and acknowledge the risks associated with this setup, and also understand that any breakdown price event could be moderately dangerous with quick price action to the downside.

We believe there are a number of great opportunities setting up in the markets right now.  Various sectors and price setups have caught our attention – this SILJ setup being one of them.  We believe the next 6+ months will present some great trading opportunities for those individuals that are willing to “wait for confirmation” of the trade entry.  The one thing we’ve tried to make very clear within this article is this “setup” is not a trade entry trigger.  There is far too much risk at this point for us to initiate any entry or trade, and we will make the call to trade once we have the signals we seek.  Confirmation of this trade setup is pending – but it sure looks good at this point.

Are you ready to find and execute better trades in 2021 and beyond?  Can our research and trading team help you develop greater success?  We follow the markets and share our proprietary research so you can become a better trader. Visit www.TheTechnicalTraders.com how we can help you cut your trading research, teach you how to spot the opportunities and setups we see, and generally stay ahead of the market.

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

NOTICE AND DISCLAIMER: Our free research does not constitute a trade recommendation or solicitation for readers to take any action regarding this research.  It is provided for educational and informational purposes only.

 

Advertisement
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US