Chart of the Day - Monday, May 18th, 2020

Today’s Chart of the Day was shared on Twitter by JC Parets (@allstarcharts). It's a weekly candlestick chart of the Silver ETF, $SLV. On Friday, we highlighted the ongoing breakout in Silver Mining Stocks, which has been fueled by the recent strength in Silver. JC uses this chart to illustrate the power of failed moves. As you can see, that $13 level acted as support several times over the past five years until it briefly broke down in mid-March. Price quickly reclaimed this level, forming a failed breakdown. Failed breakdowns, or bear traps as they're often called, can lead to sharp rallies. Think about it, when price breaks below a well-defined level, longs get stopped out and bears pile in short. If price fails to follow through to the downside, and instead quickly gets back above that level, it tempts longs to re-enter and forces shorts to buy-to cover. In short; "from failed moves come fast moves in the opposite direction!"