Silver’s Technical Tricks
- Posted by Greg Harmon
- on February 20th, 2013
Quite often currencies and commodities trade more strictly to technical patterns than individual stocks and indexes. The recent moves in Silver, shown in the Silver ETF, $SLV, below, are no exception. Since breaking higher in mid August, Silver has been cycling through two harmonic patterns. First, a bullish Gartley completed in January with a reversal higher that came within 1 penny of Initial Price Objective (IPO) of 31.42, a 61.8% retracement of the range of the Gartley. But it turns out that this move higher was just the first leg of a bullish Crab, should it continue lower
(and it is in pre-market trading). The Potential Reversal Zone (PRZ) of the Crab starts at 27.37 and runs lower to 26.88. A break back up through that and then reversal higher carries an IPO of 29.68, or 61.8% of the Crab range. What if it does not continue lower? Well that is okay too. The pattern up until Tuesday could also be a second bullish Gartley that has already moved through the PRZ at 29.21. In this case a reversal, triggered by a move back over 29.21, would target 30.34.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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