Chart Lesson: Silver Long Play Jan 29, 2013
Part of Art of Chart Reading
As a routine, I review at least the daily charts on all the markets I trade. It does not matter if I have a position on or not. It is important to have an idea of how the charts look like and how they usually move. In another words, get yourself familiar with them and know their characters.
I posted in real-time chat yesterday (Jan 29, 2013) about going long silver. Following is how I arrived at my trading decision and how it has been managed. The charts shown are screenshots done a few minutes ago so they are not showing exactly what I saw at the time as the bars were still developing. They still do a reasonable job illustrating my points.
On Jan 28, 2013 I got this daily chart that popped out with a potential long trade.
Reasons for being bullish,
1. Entered the down channel from an up move
2. channel top not tagged yet
3. Pullback to channel mid and the swing low prior to the last (remember the STOPD principle?)
4. Potential target at least channel top and if that is taken out we get previous quarter high (start of the down channel / bull flag)
To see precisely what to do I switch to 4 hours timeframe for a trade plan.
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