What’s inside:
- Silver stuck in range
- Quiet trading likely to remain, need to be selective
- Opportunity could exist upon moves to either side of the range
Since about this time on Friday – the last time we discussed silver – it is priced about 20 cents higher. Silver remains almost smack-dab in the middle of the range which began back in the very beginning of July. The range is likely to continue barring a major catalyst.
That doesn’t sound like a call for a very ‘fun’ trading environment, does it? Sometime (a lot of times) trading isn’t ‘fun’. But if you want to put a positive spin on it, look at it like this – if you are keeping your trading tight and not losing money while trading is difficult, then consider it a win and feel good knowing you will be ready (not digging out of a hole) when the trading environment improves. Equities are pretty quiet, too, but FX is experiencing some swings, oil as well - these are places traders can look for opportunity while precious metals continue to offer limited opportunity.
Now, this not to say there may not soon be opportunity, because things can change quickly – it’s just the opportunities at this time will be further apart and with lower profit potential. Silver may still present a good trade or two within the range if it can move to the upper and/or lower bounds and exhibit clean signs of turning back in the opposite direction. Short at the upper bounds, buy at the lower bounds, and do nothing in the middle (We discussed this not long ago).
There is a triangle developing within the middle of the range, this could offer up some scalp opportunities, but given it is forming within a range it doesn’t present good risk/reward on a break for anything other than a quick-hit, intra-day type trade.
So with that said, we will remain patient and wait for a move to the upper or lower end of the range, and when it does we will look for an opportunity to go the other way with it. If silver breaks out in either direction, then we will look for it to retrace and hold the breakout level before entering in the direction of the break.
Track trader positioning in real-time via FXCM’s ‘Speculative Sentiment Index’.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
He can be reached via email at probinson@fxcm.com with questions or comments.
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