What's up traders. Looking at another bearish position today, this time we have a butterfly formation on silver against the dollar.
The price of silver has been moving sidewards for over a year now and we are starting to see price become very compressed. The daily chart is sowing price being squeezed into a triangle formation (the high of which is set around the same area.
As you can see price has began to drop slightly although it didn't exactly hit our PRZ at the 1.272 extension. The reversal signal came in the form of a bearish engulfing candle- unfortunately the close of this candle was too low for me and had too great an impact on the pattern's risk:reward. Should price push back and re-test this area we should then be looking for an entry.
Again we will be using our 0.382 and 0.618 levels as our TP levels whilst keeping our risk:reward as close to 1:3 as possible.
Butterfly ratios are as follows:
B = 0.786
C = 0.382-0.886
D = 1.618-2.24
X to D = 1.272
The price of silver has been moving sidewards for over a year now and we are starting to see price become very compressed. The daily chart is sowing price being squeezed into a triangle formation (the high of which is set around the same area.
As you can see price has began to drop slightly although it didn't exactly hit our PRZ at the 1.272 extension. The reversal signal came in the form of a bearish engulfing candle- unfortunately the close of this candle was too low for me and had too great an impact on the pattern's risk:reward. Should price push back and re-test this area we should then be looking for an entry.
Again we will be using our 0.382 and 0.618 levels as our TP levels whilst keeping our risk:reward as close to 1:3 as possible.
Butterfly ratios are as follows:
B = 0.786
C = 0.382-0.886
D = 1.618-2.24
X to D = 1.272
Commento:
The daily chart illustrates the direction price has taken in recent times, supporting the confluence of the butterfly pattern.
Commento:
Price has confirmed our D point and entered the PRZ. Price has risen rapidly, giving an indication that price may become violent as we approach the resistance at the top of the triangle. I will update further as price progresses.
