A new and interesting twist has appeared in Silver’s movement which has confused many traders and investors. Whether we look at the 4-hour time frame or the 1-day time frame the chart pattern appears almost the same.
I would like to explore some important points in this analysis so traders and investors can better understand the current situation.
We saw a strong bullish move earlier but after that the market faced bearish pressure again resulting in eight to nine consecutive red candles. Then during the weekend the market mostly moved sideways.
As soon as the new week started a green candle initially showed buying pressure but immediately after that a red candle appeared with a large wick. This wick itself is actually a sign that strong buying entries are also present from lower levels.
As shown by the trendline drawn on the chart it seems that Silver has broken its bullish trend and has now formed a clear bearish pattern because the candles are now closing below the EMA 200.
At the same time the red candle has also broken the trendline which at first glance looks like a very bearish scenario.
However such moves often turn out to be fake breakouts. This is the point commonly referred to as a liquidity grab where large institutions make retail traders believe that the market has become completely bearish so that most people enter selling positions.
In contrast smart money usually looks for the best buying opportunities in these same zones. They always shows you the back side of the image..
In my opinion after its continuous red candles, Silver has now entered an important exhaustion phase and there are still three unfilled fair value gaps remaining.
In particular the fair value gap between 79 to 80 appears highly significant and it seems possible for the market to fill it. This is why I still see this move as more of a bullish recovery setup.
It is possible that this entire move is simply a fake breakout designed to confuse retail traders forcing weak hands out of the market before the price starts recovering again.
If buying pressure remains strong Silver could once again target the upper liquidity zones and after filling the fair value gaps decide its next major move.
I am not a financial advisor. I simply enjoy studying and analyzing charts, candlesticks and market structure. This is only my personal observation and idea to help traders better understand different market possibilities and it should not be considered financial advice.
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