The following is a subsection of my Weekly Strategy Session, which I published earlier today. Members of 12631 receive the Strategy Session each weekend at no additional cost.
This particular section was included just as much for educational purposes as it was a trading setup. The rest of the Strategy Session gets at the equity market in detail, along with tons of actionable trading ideas.
The daily charts for the precious metals and miners ETFs are setting up for a “middle Bollinger Band” trade, for aggressive players.
For reference, Bollinger Bands are useful technical indicators for measuring, among other chart characteristics, relative tops and relative bottoms. Typically, when price breaches its upper or lower Bollinger Band the chart has arrived at momentary overbought or oversold conditions, respectively. At that point, if price reacts sensitively to the Bollinger Band and sees a price move away from the Band, you can usually expect a test as a first target of the “middle Bollinger Band,” which is the 20-period moving average on any given timeframe.
Here, we are dealing with daily timeframes. So, the middle Band is the 20-day moving average (orange line on my charts). And as you can see on each chart, below, for GLD SLVand then miner ETFs GDX SIL, price arrived back at the middle Band last Thursday and paused on Friday.
What typically happens next is you see a continuation of the bounce towards the upper Bollinger Band, or a rollover back down towards the lower Band. This setup allows aggressive traders to have clear stop-loss parameters if they decided to play (stop-loss for longs just below the middle Band, and buy-cover stop for shorts just above it). Mind you, with respect to the metals and miners we are still talking about charts in established downtrends, with declining longer-term moving averages.
Thus, this would be a trade setup for aggressive traders seeking a quick, high beta opportunity, lasting a few days at most. Watch for a break either way from the middle Bands.
Please click here for details about reading this weekend’s full Strategy Session.
I just trade what I see and have always liked the PM stocks (been trading them since mid-80s- HM,ECO,SSC,PDG,KLOFY,WDEPY,VAALY,-all now defunct via merger) because they are usually pretty telling relative to the underlying metals.
I saw the PM stocks slide again into the abyss on Friday after the nice Thurs. bounce.
Then, after 2:15 they just started to climb.
I took some small flyers on ABX,GDX,GDXJ and will watch them on Mon. for confirmation and then may buy some more for trades.
ECO was Echo Bay Mines, right? I think that was my first PM stock purchase. And I think PDG was Placer Dome. You’re right, the big fish eating the little fish.
Yes, they were.
SSC was Sunshine Mining and eventually filed Bankruptcy on the silver slide in the ’90s.
The ones that ended in a “y” (plus OFSLY) were S. African plays.
They were so easy to read back in the day.
I really look for some consolidation, mostly for survival.
Hi TraderCaddy, do you think we saw the high for PM, or will hit new high longer term ? Thank!
Chess, do you use Bollingers with SMAs or EMAs?
only SMA
Thanks