Relative Strength

We pointed out over the last few weekly chartbooks that “no position” is a good one to have in choppy sideways markets. Nevertheless, there are opportunities in the markets and if they present themselves one needs to act swiftly. Relative strength is one such edge that one can take advantage of.

On April 17th 2019 was the 5th day in a row (yellow arrows), that gold prices closed lower than the prior day! The true weakness is evident.

Daily chart of gold, oversold

Gold in US Dollar, daily chart as of April 17th 2019

While gold was declining, silver traded sideways up, showing true relative strength! There is always much speculation why markets unfold in such manner and reasoning is manifold. For example the US-Dollar strength, that obviously has a strong relationship/influence towards the precious metal sector. And a variety of complex reasons on how this strength might diminish over time within this year. Or from a technical analysis perspective the $15 price level being a magnet.

The mind is always curious to find answers for complex relationships and even more wants to be right with these assumptions. It is of little importance so to “truly know”. At least from the perspective of consistently making moneys in the markets.

Silver (daily chart) trading sideways:

Silver in US Dollar, daily chart as of April 17th 2019

What is meaningful is to act when edges present themselves. Like this one where a “breather”(= a brief long bounce) after a multi day price decline in gold can be anticipated. This in consequence provides a chance to propel prices of a sector related trading pair, like silver in this case, which was only suppressed by its peers, quickly higher.

Daily gold chart April 18th 2019, possible price bounce after multi day price decline:

Gold in US Dollar, daily chart as of April 18th 2019

Such an opportunity presented itself on Thursday of last week.

You can find real time entries in our Telegram channel. The low risk idea here is to enter at low price levels and anticipate a small rally shortly after. Allowing to finance a trade (our quad exit strategy = taking 50 percent of position size off for initial profit taking).

60 minute chart-low risk opportunity due to relative strength towards the sector:

Silver in US Dollar, 60 minute chart as of April 18th 2019

It is of fairly little consequence if an individual trade works out. Rather the idea of very low risk entries over a larger sample size are bound to generate larger profits on ones winning trades versus ones loosing trades, is important. So no, you do not need to know reasoning’s in detail and find reward in being right if you guessed right, with such multidimensional chess game thinking.

What is important is to act when time allows for exposure of money to the markets. When the odds are in your favor, execute with discipline and persistence. This creates smooth, low draw down equity curves, and results in consistently growing your investment capital.

Join our free Telegram Group :https://t.me/joinchat/HGe22hDDEEl0LvFGAgEZ9g

All published information represents the opinion and analysis of Mr Korbinian Koller & his partners, based on data available to him, at the time of writing. Mr. Koller’s opinions are his own and are not a recommendation or an offer to buy or sell securities. Mr. Koller is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations. As trading and investing in any financial markets may involve serious risk of loss, Mr. Koller recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Although a qualified and experienced stock market analyst, Korbinian Koller is not a Registered Securities Advisor. Therefore Mr. Koller’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. Past results are not necessarily indicative of future results. The passing on and reproduction of this report, analysis or information within the membership area is only legal with a written permission of the author.

Important Trading Risks and Earnings Disclaimers - Terms of Use

RISK DISCLAIMER: All forms of trading carry a high level of risk so you should only speculate with money you can afford to lose. You can lose more than your initial deposit and stake. Please ensure your chosen method matches your investment objectives, familiarize yourself with the risks involved and if necessary seek independent advice.

U.S. Government Required Disclaimer - Commodity Futures Trading Commission. Trading financial instruments of any kind including options, futures and securities have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options, futures and stock markets. Don't trade with money you can't afford to lose.

NFA and CTFC Required Disclaimers: Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of experience and risk appetite. Do not invest money you cannot afford to lose.

EARNINGS DISCLAIMER: EVERY EFFORT HAS BEEN MADE TO ACCURATELY REPRESENT THIS PRODUCT AND ITS POTENTIAL. THERE IS NO GUARANTEE THAT YOU WILL EARN ANY MONEY USING THE TECHNIQUES, IDEAS OR PRODUCTS PRESENTED. EXAMPLES PRESENTED ARE NOT TO BE INTERPRETED AS A PROMISE OR GUARANTEE OF EARNINGS.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAN ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All information presented or any product purchased from this website is for educational and research purposes only and is not intended to provide financial advice. Any statement about profits or income, expressed or implied, does not represent a guarantee. This presentation is neither a solicitation nor an offer to Buy/Sell options, futures stocks or securities. No representation is being made that any information you receive will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. Please use common sense. Get the advice of a competent financial advisor before investing your money in any financial instrument.

Terms of Use: Your use of this educational website indicates your acceptance of these disclaimers. In addition, you agree to hold harmless the publisher and instructors personally and collectively for any losses of capital, if any, that may result from the use of the information. In other words, you must make your own decisions, be responsible for your own decisions and trade at your own risk.