{"id":58552,"date":"2023-05-09T09:00:19","date_gmt":"2023-05-09T13:00:19","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58552"},"modified":"2023-05-09T10:00:45","modified_gmt":"2023-05-09T14:00:45","slug":"silver-update-roller-coaster-ride","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/05\/silver-update-roller-coaster-ride\/","title":{"rendered":"Silver Update: Roller Coaster Ride"},"content":{"rendered":"

The previous post \u201cGolden Pattern For Silver, Not Gold<\/a>\u201d from December highlighted a bullish pattern called the 'Golden Cross' that appeared on the daily chart of silver futures. This occurred when the 50-day moving average crossed over the 200-day moving average. <\/p>\n

While the majority of readers considered this signal to be reliable, they did not expect the price of the metal to rise above $30. <\/p>\n

The following daily chart will show how the pattern has played out since then.<\/p>\n

\"Silver<\/a>
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Source: TradingView<\/a><\/em><\/center><\/small><\/p>\n

When the \u2018Golden Cross\u2019 signal was posted, the price of silver futures was at $23.9 (marked by the orange vertical line), and it went up almost $1 to reach $24.8 before stalling for over a month. <\/p>\n

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The price was unable to break above this new high and subsequently collapsed, dropping below the blue 50-day MA and testing the red line of the 200-day MA, briefly breaking through to reach the \u2018golden cut\u2019 Fibonacci retracement level of 61.8% at around $20. <\/p>\n

Fortunately, the price rebounded strongly from this support level and crossed back over both moving averages to establish a new high of $26.4 last Friday. <\/p>\n

If you had read the complete post, you would have been more prepared for the market movements described above. I spotted a Bearish Divergence on the RSI sub-chart and alerted about the possibility of a retest of both moving averages. As it turned out, this warning was spot on.<\/p>\n

Ultimately, the price of silver saw a $2.5 or 10% increase from the time of the 'Golden Cross' signal to its most recent top, validating the reliability of the signal. <\/p>\n

Nevertheless, the subsequent rise of only $0.9 (+3.8%) followed by a significant drop of $4 (-16.7%) to $19.9 could have been quite unnerving for even the most experienced traders. Therefore, I believe that this traditional signal should be viewed as a medium-term directional indicator rather than a prompt for immediate entry into the market.<\/p>\n

The way the price moves in relation to the moving averages is particularly interesting. Specifically, when the price crosses above the blue 50-day MA, it can be considered a good tactical trigger for a bullish entry (or bearish stop), and vice versa. On the other hand, the slower red 200-day MA tends to act as a strong support or resistance level.<\/p>\n

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RSI divergence is a highly effective tool that I often use to warn readers in my posts, and it has a strong track record of accuracy. It proved successful once again in the recent price movement, as it allowed careful traders to protect 10% of their investment and avoid unnecessary stress.<\/p>\n

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Which of the following patterns do you find most reliable?<\/strong><\/p>