The average investor is news driven. As much as the Federal Reserve (Fed) may be criticized, this large group of investors is usually suspicious of the news. In other words, the Fed’s narrative was generally believed that inflation was temporary.
Bad news is rarely published shortly before Christmas. However, it wouldn’t be surprising if this tapering starts in early 2022. And maybe not only does it start, but it will be fiercer throughout the year as expected.
With this, the narrative will change from “we’re not worried, it’s temporary” to “we need to deal with it” when it comes to inflation. Therefore, this could be the fire in the silver missile’s fuse. We are now seeing early signs of such a price rally in recent price action.
Silver daily chart – low risk entry points
It’s not just that the public narrative of transient inflation is starting to get holes. We love the silver play, for example because it is somewhat of a spotlight in a fight with, and thus, allowing silver to shine while it is usually in the shadows. Above all, we find clear evidence that industrial-use goods are likely to be in a long-term bull market.
This is a play where it all comes together. Multiple streams, in both fundamental and technical terms, accumulate on each other. At the time of writing, we have identified four low-risk entry points on silver’s daily chart, which are marked by bright green horizontal lines. We will take off 50% of the position near the $26 mark to mitigate risk (see Quadrant Exit Strategy).
Silver Weekly Chart – Good Risk Reward Ratio
The weekly chart also provides a low risk opportunity. We have shown above a play assuming an entry point in the lower third quadrant of the lateral region marked in yellow. It will provide a risk/reward ratio between 1:1 and 1:2 towards the funding point. Also, suppose half of the position exits at the top near $28 of the yellow side channel (see Quadrant Exit Strategy).
With two additional exits out of every 25% of total trading capital at targets $34.83 and $48.72, we find that weekly play is conducive to our low-risk policy.
Silver monthly chart – favorable odds
With its heavier weight, the monthly chart provides the necessary overview. It shows how likely the success rate is in the outcome of playing in the long run. We find three dominant aspects that support our goal of long-term bullish play.
direction: The linear regression channel is marked with diagonal lines (red, blue, green). It shows a clear uptrend with a high probability of continuation.
the support: Ichimoku cloud analysis provides strong evidence to support the bullish tone that was recently established in silver.
Possibilities: Price hikes from 1980 to 2011 created a double top for the price. As a result, it has prevented prices from rising above the price area marked with a white box. However, the third attempt to reach this price area has a much higher statistical probability of breaking through this distribution area and allowing the price to rise.
We find ourselves in difficult times. Certainly, not only in the play market. One of the cornerstones of going forward is bending in the wind and staying flexible. If the Fed does indeed raise interest rates to a degree that is not reflected in the speculators’ expected market rate and it comes as a surprise, we could see the stock market drop next year by a significant percentage.
Hence, this will cause silver prices to drop temporarily as well. We share the methods in Our free Telegram channel To build low risk positions within the market to reduce risk through partial profit taking. Our quadruple exit strategy allows us to hedge our physical acquisitions by trading around these positions on smaller time frames in the silver market. Our approach provides a way to maneuver through a sensitive environment to hedge against inflation and preserve wealth.