At the end of 2014, I marked a few levels to watch out for as high probability turning points. As of recently, silver, or the XAGUSD CFD equivalent that I’m monitoring, held up this zone nicely.
December ended off in a doji, which was not surprising adjusting for seasonal trading volumes. December is typically the time when traders are looking to close out their positions and and prepare for the holidays. Due to this, the doji formed in December was ignored as a potential turn around point. Meanwhile, the current month shows lots of buying activity.
Is it time to start buying back into silver? First up is taking a look at the 3-day time frame. It better illustrates the recent breakout that occurred.
This breakout point may serve as a potential resistance (temporary pullback) before another round of selling begins. We could just be experiencing a rally due to the fundamental factors causing traders who have gone short to to close their existing positions. The moving average settings experienced quite a few overlaps so it would not be as reliable in this case.
However, it is still possible to get in on the trade for the short term as to not miss out on the trade. Buying on a daily is a good short term move right now, especially with a viable long term buy and hold.
The lower wick formed today is a very good sign that buyers have not weakened. My guess is that the daily started with a round of selling, but only to have buyers push the price back up and possibly closing higher. After yesterday’s engulfing bearish candlestick, this is another good short term swing entry opportunity.