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
Commento
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The daily chart illustrates the direction price has taken in recent times, supporting the confluence of the butterfly pattern.
Commento
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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.
@Tara, price won't drop to 16 without some consolidation as it first must break the support of the trendline
gson
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i guess you not holding silver.
KyleMcQuade
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@gson, unfortunately not- price did not show a reversal signal before breaking the level of my stop loss. For me, the harmonic was then invalid. The triangle held well though!
JHperez
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still possible?
KyleMcQuade
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@JHperez, definitely still possible but we must be wary as price has entered the zone quite urgently. I will update as the move continues.
JHperez
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@KyleMcQuade, There is a strong resistance right now. I have a few open sell positions, not so sure if i should close them
KyleMcQuade
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@JHperez, I didn't get in, the 4 hour did not produce a reversal signal before reaching the level of my stop so the trade was invalid for me.
Will it not go back to 16?