I bought EXK this morning because it took out yesterday high of $7.77. I also like the fact that there are 3 triple bottoms since 6/28. But I only like EXK (or silver) if it can rebound from yesterday low. Unfortunately, due to a down day today in the stock market, EXK morning rally frizzled and is now in negative territory. Needless to day, I sold EXK to cut my loss quickly and started focus on extending my TZA and SKF position in the morning.
One thing that silver lovers need to be aware of is the forming of the Descending Triangle. As a chart reader, I do not put too much weigh on the “fundamental” reason why silver has to go up (or down). But I do pay a lot of attention to the formation of chart patterns that have been proven for decades with high probability of repetition.
By the principle of Descending Triangle, if the base support (with the 3 triple bottoms in the case of EXK) is pierced to the downside, there is a high probability of continuation of the downtrend.
You can argue about why silver can’t go any further down due to more printing by the Euro or the US all you want; but I will be paying more attention to the Descending Triangles that are forming on on silver based stocks. EXK is no exception. Take a look at the daily EXK chart below. At the rate it is going now, it may even take out the base support today. Remember, if the price action of EXK takes out the base support and head to the downside, it is because there are enough sellers to make it happen. And that mean there are not enough buyers who believe in the printing theory to warrant an uptrend on silver. At least, not what the chart is saying right now.
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