During this week’s analysis, we have an example of market confluence. It (market confluence) always increases our chances of being profitable as it offers high probability setups. Looking left we see price has been falling steeply but the trend reversed on a sizeable hammer. Bulls took over then the bears resumed with their downtrend in a descending equidistant channel. Within the confines of the channel, we see a morning star which is part of a fakey setup. Traders were faked into going short but then the morning star reversed that momentum and even closed above the mother candle which is a signal to go long.
Bulls seem to be very resilient within the channel. We’ll have to wait and see if the force will be enough to breakout above of the channel. While this may be true we got to sit on our hands momentarily to see how price behaves around the upper boundary of the descending channel. Sellers may come in and negate the rally; in any case we are in a descending channel.
We are going to look at silver vs the dollar in this week’s analysis. Price has been on an uptrend since late last year then fell into a consolidation. The range is in form of two chart patterns. On one hand we see a falling wedge, and on the flip side we see a slanting head and shoulder pattern with a slanting neckline as well. Presently price has bounced off the neckline.
Currently, the neckline has held its own, but we don’t know for how long. Two scenarios can play out at this point. Eventually bears could take charge and drive price in a waterfall breaking below the neckline. Once a close and confirmation happens, our bias will be bearish. Conversely the bulls may maintain the momentum and rally price breaking out of the falling wedge. Therefore we wait, as we all know good things come to those who wait.