Silver - not touching shares. There's still a bigger bull ahead. But man did da boys fake me the hell out (and almost every experienced trader I know). Not only did it break out of a multi-month range, but it broke over a multi year trendline and got some continuation. The bull was raging. Then they slammed it back down and have decimated millions in options positions. Why did this happen? How did i miss it?
Well go back to my last post on this thread regarding BTC. Bitcoin had the $100k wall. There was an insane amount of orders sitting open to sell there. The amount off volume to break through that wall was going to need to be ferocious. After first test and pullback, it broke through. How? The sellers moved out of the way. Buyers piled in, and many more jumped on once it broke through thinking it was confirmation of moon shot incoming. But the sell wall wasn't taken down. It merely moved. They re-engaged it at a higher level and slammed price back under $100k and even broke first support which had millions of dollars in stops. They suckered buyers in and then crushed them. Guess who was buying that low? The ones who had just sold to slam the buyers down. It was absolutely nasty, but so well done.
Well silver over the last month or so appears to be similar. They trapped us. And I got caught with a ton of open November and December options, and even some new Dec and Jan calls I engaged. Absolutely destroyed. Luckily, I caught the low and bought a significant amount of December SLV $27.5's. The goal was to sell around $29, with the proceeds making up for a lot of my potential losses on calls that might not be worth much at Dec or Jan or expiration.
Here's where I see silver today. And this is futures, so remember that SLV has a discount in price to spot and futures. This CAN end up bullish, but it has a lot to prove, and as far as December and January calls go, I'm not taking my chances, especially since I have formed a starter position on March calls and have a significant amount of SLV shares. This pattern has the classic look of a corrective "B" wave. B's are the 2nd leg of a larger 3-wave correction that retrace up from the first move down. Within the B, it's forming a pretty clear overlapping 5-wave ending diagonal. And ED's almost always retrace their point of origin at the very least which for spot and futures is around $30. I'm expecting silver to top out soon around $32.50 - $33 spot and futures, roughly $29 or so in SLV. I will be selling all December calls no matter the value, and anything for January worth at least 1/3 of my cost. The January calls that are higher and likely won't be worth much can be my exposure for something else happening or a sudden bullish spike over the next month of trading days. I might even sell some March calls if I can get at least 50% return, because I expect to be able to buy them back in a month or so.
For this to turn bullish, I need $32.50 futures without seeing under $31.65 again. Even still, this would likely retrace to $31.75 and then hit $33, come back to $31.50, and then have a consolidation / build up period before ready to take off. That will take some time.
Of course, anything can happen. As y'all know, I use EW and Fibonacci pinball as a blueprint. I've done this a long time and the blueprints are based on what is most probable given the structure showing. There are plenty of times where something randomly explodes up or down and destroys the blueprint. So I advise you to determine the risk management that suits you best. I believe SLV will be at or above $40 by mid next year if not sooner. And once that move engages, it will go fast. Silver tends to play "catch up" to gold in metals bulls and the explosive silver move usually precedes a MAJOR top by weeks or months.
