Time to Buy Silver?

All aboard the silver train!

Silver is building a solid congestion at a 38.2 percent retracement at $31.92. It also held the 200-day moving average at $31.14. Silver is seeing a positive trade this morning press it above $32.50, off of encouraging data out of China and ahead of U.S. data. As this market moves higher, there is room to see a run to $33.15.

If you have been long, I would recommend exiting by $33.10. If you are looking to get short, I am using $33.145 as my major resistance at the 50-day moving average. Resistance above there at $33.50 could even be a point at which to add or conservatively enter. Only a close back above the major 61.8 percent retracement at $33.95 will cause a short covering rally that could test the yearly highs.

So what's my trade?

BUY the dip and SELL the rip. I am buying the December silver futures at $32.25 with a $31.75 stop. My target is $33.15, which is at the 50-day moving average. Given that each point in the silver futures is worth $50, I am risking $2,500 to potentially make $4,500. Each point is silver futures is worth $50. Note that if the trade is not filled today, it will expire.

A final tip: If you want to reduce exposure, you can also use the mini-silver. Since the mini-silver is one fifth of the size, each tic move is worth $10.

Read on for 10 Things You Need to Know to Trade Futures

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