Why I Bought Silver Down 55%

Filled at 9:12 AM. Here's the thought process, top down.

Trading is more of a mental game than anything.
Yes, good analysis and research are required…

But if you do all the analysis and all the research and you can’t bring yourself to pull the trigger mentally... you’ll never survive in this game.

I’m saying that because I bought this morning. A market down 5% on the day... after an already 55% move down in price.

I’m talking about silver.

Pulling the trigger is only hard when you haven’t done the work. When the levels are marked in advance and the plan is written before the panic starts, the trade almost takes itself.

So here’s the homework I did to prepare….

First, Zoom Out

The daily chart. /SI ran from 45.51 in late October to a blowoff high of 121.785 in late January.

Everything since then has been digestion... a 6-month correction that has now retraced into the mid-50s. This is right on top of the breakout shelf from last November highs.

More importantly, the downtrend from mid June is losing momentum. You can see that on the RSI. Here, the lows from 6/24 to 7/14 happened. But RSI rose from 26 to 35 across that same period.

When the daily RSI is making higher lows and price is making lower lows... That’s called bullish divergence.

In addition to the divergence into a previous resistance point (November ‘25 highs), we also had price carving out a falling wedge into the lows.

According to every Technical Analysis book out there, falling wedges are bullish.

Notice where RSI sits now, even after today’s selloff... right at the 40 line. In range-based RSI terms, holding 40 on pullbacks is what bullish moves do. Bearish regimes lose it quick.

So far, we’re holding.

Another thing I look at is volatility.

Low volatility doesn’t tell you direction... it tells you a big move is potentially loading up. Pair that with a directional read from the daily structure….

Now there’s something useful…
Now I have something that interests me…