The Silver futures contract has enjoyed a nice run of strength lately, but is beginning to stall at a clear area of pivot confluence. Also, one of my favorite candlestick reversal patterns has just fired a short signal, which means a round of weakness could be seen ahead!
Pivot Resistance
The daily chart of Silver futures shows price has stalled after the recent advance, which saw price rally from $17.30 to $18.70.
As a matter of fact, R1 resistance is also $18.70 for the month of August, which has essentially become the high for the month thus far. Moreover, price has dropped back below the bearish H3 Camarilla pivot level, which is usually indicative of a move back to L3 support – which lies at $17.63.
If price remains bearish below H3, then L3 becomes the target to watch.
Bearish Outside Reversal Signal
The fact that a bearish Outside Reversal signal has fired at pivot resistance helps to confirm bearish sentiment. As you may recall, this system fires a sell signal when the high price is above the high of the prior session and the close price is lower than the low price of the prior day. This type of signal is basically a hybrid of the engulfing and outside day patterns.
You can see from the other Outside Reversal signals in the chart, that price has a tendency to move between 3 and 10 bars in the direction of the signal on most occasions.
Look for price to make a quick drop to the central pivot point for the month at $18. If this level is crossed, look for a continuation back to L3 support at $17.63 – with the outside chance of a drop to double pivot support between $17.25 and $17.32.
Let’s see what happens!
Cheers!
Frank Ochoa
PivotBoss.com
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