Positioning and Time

We often get asked in which direction prices will head…

Yes, it is helpful to know if markets trade up, sideways or down. What is often overlooked though is the fact, that without proper entry timing one still can find oneself in a series of loosing trades, although having identified direction correctly. This problem can have multiple causes. One of them is a time relativity error (Positioning and Time). Others are misaligned risk/reward ratios. And there are many more…

This weeks silver chart-book illustrates such a scenario. The purple line shows clearly temporary overhead resistance. This was the reason for our partial profit taking in last week’s silver chart-book.

Nevertheless the overall consensus is bullish in nature:

Silver in US Dollar, monthly chart as of February 3rd 2019

Silver in US Dollar, monthly chart as of February 3rd 2019

The weekly chart shows even more clearly why an instant push through the $16.15 zone was not very likely.

Silver in US Dollar, weekly chart as of February 3rd 2019

Silver in US Dollar, weekly chart as of February 3rd 2019

Our top down approach in time frame shows a bullish picture with only brief resistance. But we do not advise to initiate trades on support on the daily chart! If you hold a main position and want to reload, money management allows for such a strategy. Starting out with a new position here though does not provide a favorable risk reward ratio.

Of course, it is imperative to see through time to evaluate position taking or not (Positioning and Time). A simple evaluation of likelihood of price behavior is not enough to consistently extract profits out of the highly complex markets.

Silver in US Dollar, daily chart as of February 3rd 2019

Silver in US Dollar, daily chart as of February 3rd 2019

The four hour chart illustrates in its representation of market profile, how overhead minimizes reward expectations on the short/long term:

Silver in US Dollar, 4 hour chart as of February 3rd 2019

Silver in US Dollar, 4 hour chart as of February 3rd 2019

Patience and picking ones entry spots wisely, is the solution to the often overlooked problem of position entry. Only by looking at the market from various angels and various time frames a sustainable risk profile can be provided.

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