The financial markets are sometimes generous with second chances. But they’re stingy with thirds.
So traders looking to get in the silver trade should take advantage of last week’s pullback and use it as a second chance to buy the metal.
When we last looked at silver in August, the price had just broken above its 50-day moving average (DMA). That signaled a change in trend from bearish to bullish. And it kicked off an intermediate-term rally in the price of the metal.
But the price had moved up too fast. Silver was overextended and bumping into resistance. It was due for a quick drop lower to retest its 50-DMA from above.
Here’s what we advised readers to do…
If you’re not in the silver trade yet, give the metal a chance to pull back and work off its current overbought condition. Then start buying on any move near $21 per ounce.
Traders got the chance to buy Friday morning. But if you slept in, you missed it.
[ad#Google Adsense 336×280-IA]Silver traded as low as $21.42 per ounce in early morning trading.
But by the end of the day, the selling dried up.
Buyers stepped in.
And the metal ended the day at $22.28 per ounce.
Anyone prepared to buy as the metal came down and tested its support line was sitting on a 4% profit by the end of the day.
Take a look at this chart…
The chart now shows a series of higher lows. The 50-DMA (the blue line) has turned higher and was tested as support on Friday. It held. So now silver should be headed higher, and the price should work its way toward the $28 resistance target we pointed out last month.
Traders who missed last Friday’s “second chance” to get into the silver trade now have a choice to make. They can jump in and buy silver right now – just a little above the 50-DMA.
Or they can cross their fingers and hope for a third chance to buy.
But like I said earlier… the market is stingy with third chances.
Best regards and good trading,
Jeff Clark
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Source: The Growth Stock Wire