June 30th 2019, Silver Chartbook

Profit taking and reentry timing

Trading is not a science – it is an art form. A bold statement but if you look through history, you will find that wall-street threw some of the brightest minds towards problem solving and results were often devastating. This multidimensional chess game, for the most part counter intuitive in nature, simply has too many variables. To solve this puzzle it needs more than just a left brain approach. Some pieces are easier to place than others and we collected a few helpers for the bumpy road of market participation. Since the angle of a complexity with lots of variables can change quickly, it is advisable to keep an eye on the overall picture frequently. We did some profit taking and reentry timing last week in the Silver market and want to invite you on a quick journey through this recent history in the precious metal sector.

Daily chart of silver  6/25/2019, taking weekly profits since gold overbought and silver showing relative weakness in the precious metal sector:

Silver in US-Dollar, daily chart as of June 25th, 2019

Silver in US-Dollar, daily chart as of June 25th, 2019

Daily chart as of June 25th 2019, Gold, first signs that the party might be over:

Gold in US-Dollar, daily chart as of June 25th, 2019

Gold in US-Dollar, daily chart as of June 25th, 2019

With a news heavy week (and following weekend), it felt prudent to take some money off the table. The question is always the same: “how much risk for how much profit”. If prices are extended, most of the time it is more profitable to leave the party at its peak and take a target exit versus cashing out with trail stop orders who are in most cases wrongly set. Stops should either be very tight or very wide. News often take out positions just at their worst uncle point, to than just quickly advance further. We prefer target exits over tightening stops and exiting markets before expected risk volatility, rather than hoping for the best.

Exposed on larger time frames, where larger swings are tolerable, it was a principle based choice to close out this weekly position to lighten up on exposure.

We advised in our live Telegram channel to re-buy at US$15.08.

June 26th 2019, Silver daily chart, observing the retracement:

Silver in US-Dollar, daily chart as of June 26th, 2019

Silver in US-Dollar, daily chart as of June 26th, 2019

Daily chart June 26th 2019, Gold/US Dollar, prices pulling back towards US$1,400 level:

Gold in US-Dollar, daily chart as of June 26th, 2019

Gold in US-Dollar, daily chart as of June 26th, 2019

We expected the reversal to be a bit more aggressive. Still the plan was working so far.

June 28th 2019, Gold daily chart, the $1,400 support level bounce lost traction right after:

Gold in US-Dollar, daily chart as of June 28th, 2019

Gold in US-Dollar, daily chart as of June 28th, 2019

Silver/US Dollar daily chart, June 28th 2019, Silver showing some strength:

Silver in US-Dollar, daily chart as of June 28th, 2019

Silver in US-Dollar, daily chart as of June 28th, 2019

The cards had slightly shifted in Silver not continuing to drop as substantially as we hoped, but the overall idea of institutional risk mitigation causing a price decline was the right assumption. The beginning of next week will show how the rest of the story unfolds. We are in alignment with our scenario plotting in accordance to our low risk model.

Price range of where we see a low risk entry level Silver/US Dollar 60 minute chart, June 28th 2019:

Silver in US-Dollar, sixty minute chart as of June 28th, 2019

Silver in US-Dollar, sixty minute chart as of June 28th, 2019

We find entry prices in the range between US$15.08 and US$15.17 a low risk trade entry scenario. Having locked in substantial profits on the prior trade, and risk mitigation through a larger time frame silver holding, allows for a tight stop scenario play here and a possible reentry.

With this real life example of market behavior of silver prices versus gold prices, we tried to illustrate, that with plotting scenarios and defining exit and entry strategies, one gains a possible edge. Less prepared one likely falls back on intuitive behavior that “hopes for the best”, or otherwise emotional based actions.

In avoiding risks, but at the same time also planing on how to take risks, we aim to consistently take profits out of the market. We reinvest capital to the market for opportunity and do this over and over again.

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About the Author:

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.

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