Price on Silver has been unable to sustain the strong momentum higher and is now at the crossroads with price action forming double inside bars on the daily chart. As the daily chart both shows and explains below; price had moved higher and broken out and above the daily resistance level that looked key for price moving higher. As we discuss regularly in this blog, what was crucial was that price sustained the move and most importantly that price remained CLOSED above the old daily resistance and new support level.
As we can now see, the buying pressure from the bulls just could not be sustained. Price found a top and has since rolled back over to fall back and close back below the same key daily level. This is important because when price was moving strongly higher and above the key daily level it had a chance to set up a new strong trend higher if it could continue. I spoke about this in the previous daily trade setups post when I was looking for a breakout play on the 7th Jan 2015 Daily Forex Trade Setups Post.
Price has now formed back to back inside bars or double inside bars. These are explained on the second daily chart below and you can read about exactly what inside bars are and the price action information they give us in the trading lesson; Trading Price Action With Inside Bars.
The inside bar is an indecision candle. It is a candle that is showing that the bulls and bears are fighting each other for control. Unlike a strong engulfing bar where we can see that either the bulls or bears are in control, the inside bar shows price is uncertain. Inside bars normally form after big moves or in sideways markets such as the market we have at the moment in Silver.
The reason price is forming inside bars at the moment and forming them back to back is because price is uncertain where it wants to go and the bulls and bears are fighting for the control. Unfortunately with price breaking back below the resistance, it could tip the control back in the favor of the bears.
If price can break the housing candle low, it has a fair bit of room it can fall into to reach the next major support level. On the other hand; if price breaks higher, there is a fair bit of traffic and trouble areas that price would have to bust through to make any decent sort of moves higher.
Silver Daily Chart
Silver Daily Chart
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