Silver is STILL set up to make a big move. And, the Federal Open Market Committee (FOMC) announcement this afternoon could be the catalyst.
The last time we looked at silver in late November, the price had been chopping back and forth in a relatively tight trading range for the previous two months.
Energy was building for a big move – one way or another. And, I was betting on a breakout to the upside.
That didn’t happen.
Instead, the price of silver dipped and tested the lower end of its trading range. Then, it rallied and tested the higher end.
Now, we’re looking at a three-month-long period of choppy action.
Here’s the updated chart…
Silver closed Monday right in the middle of its trading range. It’s sitting in the same area as all of its various moving averages – which are all coiled together, building energy for the next big move. And, all of the technical indicators at the bottom of the chart are in neutral territory.
Silver often makes a big, violent move out of this sort of pattern. Just look at the big decline in March, and the big rally in July. Those moves came after silver traded in a tight range for a couple of months.
This current three-month-long trading range is longer than usual. So, we’re likely headed for a breakout that is stronger than usual. A rally could lead to a move back up towards the early September high near $28.50. A decline could test the next support level near $19.50.
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As I mentioned last month, though, the bulls have the edge.
Silver often rallies during the final weeks of the year. And, with only two weeks left in 2020, just about anything could provide a catalyst.
Nobody expects any sort of surprise announcement out of the Fed today. Most of Wall Street expects the Fed to reiterate its stance to keep interest rates at the current low levels, at least, until the end of 2021. Maybe the Fed will just reiterate that stance.
And, given the setup in silver right now… maybe that non-announcement will be enough to spark a breakout from its trading range.
We’ll know by 2:15 p.m. today.
Best regards and good trading,
Jeff Clark
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Reader Mailbag
In today’s mailbag, Jeff Clark Trader member Josie sends a note of thanks to Jeff…
Jeff, I love how humble you are when the trade is going against you.
Your clear explanations help me understand more and more about how option trading works. Thank you for sharing your expertise,
and helping us small investors be more profitable in the stock market. Best regards.– Josie
Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming – and send us any questions – at feedback@jeffclarktrader.com.