I thought I’d post some observations about silver after reading a tweet from a good friend regarding a 1 hour supply zone.
The supply zone looked good, but he (rightly) cautioned about holding the short for too long. This was because their was a tempting range of stoplosses above the supply (as shown on the chart below).
Looking at the 5 minute chart, we can see that price bounced off the 1 hour supply zone.
It always feels like a bit of a guess after entering a trade as to where it will go next. But all we have to do is drill down to the lower timeframes to get a very good idea of where to take partial profits.Once some money is banked, it’s easier to hold the remaining position for potentially bigger profits.
The main take-away from the chart below is to watch lower timeframes zones where price may bounce. Also multiple tests of a zone (as shown) will pave the way for that zone to eventually break. Using this concept, we can plan whether to hold the remainder of a position with the knowledge that a zone has already been tested and therefore is likely to be weak.
One further observation… were the moves a result of trendlines or supply? Well for me, supply and demand always trumps trendlines. But the confluence of trendline and supply would have given the move extra weight.
I hope you liked this short article. Don’t forget to retweet if it helped you!
P.S. You’ll find me using Ninjatrader charts a lot more now – they are a lot cleaner than MT4 and my preferred choice.