When in doubt, stay out !
The advice given in our last chartbook publication was spot on. Not trading Silver last week saved you money for sure. “When in doubt, stay out” is one of the very few intuitive responses one should follow in the otherwise counter intuitive market.
Gold, being a related market, and trading a tad cleaner, allowed for a low risk entry on April 2nd (follow our free Telegram channel with real time signals!).
Conservative Gold trade with tight stop
Gold in US Dollar, 60 min chart as of April 2nd 2019
By the next day the first and second target were hit:
Gold in US Dollar, 60 min chart as of April 3rd 2019
The final 25% position of Gold stopped out at break even levels.
Looking at the daily chart, Silver shows a so-called “Megaphone” formation. It is defined by expanding highs and lows on consecutive days. A trader’s nightmare, no matter if you trade this from the long side or the short side. Stops get taken out immediately and do so on second try efforts as well. This is the costliest environment to a market participant, and highly taxing to psychology. Six sigma events are even more dangerous, to both your portfolio/wallet and psychology, but they are rare. Fast chop, which is another form of extreme struggle between conflicting investor beliefs whether prices go up or down, is also rarely to be seen.
This makes the relatively common Megaphone formation the one, to truly look out for and avoid.
Megaphone formation, “when in doubt, stay out!”
Silver in US Dollar, daily chart as of April 6th 2019
All this makes no position, one of the most valuable ones. Patience pays. As does sitting on one’s hands. Keep your powder dry and wait for true low risk opportunities!
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