Knowing Support Level & Resistance Level
Second trick to buy cheaper silver is through technical analysis. In technical trading analysis, there are term known as support level and resistance level. Support level and resistance level can be seen as a concept in technical analysis that the movement of the price of silver will tend to stop and reverse at certain predetermined price levels.
Support level is a price level where the price tends to find support as it is going down. This means the price is more likely to “bounce” off this level rather than break through it. However, once the price has passed this level, it is likely to continue dropping until it finds another support level.
Resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to “bounce” down this level rather than break through it. However, once the price has passed this level, it is likely that it will continue rising until it finds another resistance level.
You do not need to be a professional trader to learn about these. Simply recognizing the fact that there are support level and resistance level already made yourself stand out from most of the people who are merely trying their luck.
If you have the time, energy and patience, by all mean learn at least one technical analysis methodology. There are so many school of teachings but you do not need to know all of them. As a beginning, if you could master just 1 methodology, you are already better than 90% of the investors out there. I would recommend you to learn Ichimoku. Ichimoku is a famous technical analysis methodology since late 1960s. In the recently months of silver price fluctuation, Ichimoku has proven to me that it is rather accurate in predicting the direction of silver spot price. There are several very active support groups for this methodology. They are willing to share their knowledge with you at no cost. All it takes is your commitment. Look for it and you will find it. Advantage of learning such methodology is that the knowledge is transferable to any other type of technical tradings including Forex and commodities.
Many silver investors would agree that year 2011 is a very exciting year for silver spot price because there was a lot of major ups and downs in the year. Let’s have a look at how did silver fluctuate in year 2011 in the following graph:
For the untrained eyes, the graph looks like just another price fluctuation graph without realizing there is a very obvious and important information presented there. What can we tell from the graph? Now look at the following graph:
As we have discussed about support level and resistant level, we can draw a very clear line at USD 34.00 as there is a strong support level and also a strong resistant level. What I have shown you above is probably 1% of the studies of technical analysis. If you have a “Aha!” moment and interested to learn more about similar knowledge, I suggest you go to Google and start learning more about technical analysis. It is an important skill if you are serious about investing in silver.
However, If you are like most of the silver investors who couldn’t be bothered to learn technical analysis in detailed, here is a no brainer trick – listen to the analysis given by professional technical analysts. Identifying support level and resistant level are not rocket science. Support level and resistant level can be easily identified by a lot of people who have basic knowledge in technical analysis. In fact, many silver investors (who have not even learn about technical analysis) could also accurately advice you on where the major support levels and resistant levels are. There are a lot of Youtube channels which gives silver price analysis update on weekly basis. Look for them, verify if their analysis are accurate for several weeks before following their prediction.
So, why am I talking so much about support levels and resistant level? Most importantly, how can you take advantage from it in your silver investment? Basically there are 2 ways we can take advantage of the support levels and resistant level as following:
Method: Buy At Every Bounce
First identify where the support level is. If silver price has been dropping, wait until spot price reaches support level, if price started to bounce back, buy immediately.
The advantage for this method is the buyer is protected from the spot price continue dropping.
The disadvantage for this method is the buyer will never buy at the lowest point of the price drop.
Method: Buy At Every Major Support Level
First identify where the support level is. If silver price has been drastically dropping, buy at all major support level. The keyword here is major support level or a very strong support level.
The advantage for this method is the buyer very likely buy at the possible lowest price.
The disadvantage for this method is buyer might face a situation when buyer has bought silver and the price still keep dropping.
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