Silver Flash Crash - Gold breaks support
Silver Flash Crash What is a silver flash crash? Let’s look what happened – This is the pic of the silver flash crash that occurred: at 4:06 on July 7, 2017. There were 18544 net short contracts as seen in a technical indicator called On Buyer Volume, which is one of the few transaction based indicators (real info) which shows the number of shares traded and if they are net short or long. At 4:07 for 1 minute 4,954 contracts – each contract is 1000 ounces, was fired off SHORT at market and went down to 14.34 with a close at 14.68.
What is interesting is that the OBV was -21,869 at close from a low of -23,600 contracts. Next minute 1300 buys, then 1000 buys, then gradually more and more buys, until the price came to 15.86 .
So the same number of contracts sold (shorted) into this market were then bought right back, but the net of the reaction was to bring the outstanding contracts to -20701 outstanding.
The next 23 min utes it hit -22,000 contracts and price stabilized (not really stable though) at $15.82.
The Silver flash crash occurred because there were not enough contracts offering a bid. So when a large market order was executed the contracts were absorbed at all levels down to the support. Once all the contracts were executed on the sell side then the buyers brought price back up, almost and equivalent amount. Some people call this a Fat Finger trade. But with my experience of the risk management and protocols for a large market maker trade there is no way that a fat finger trade can exist. The trader that fat fingered this trade would have probably had to go through at least one verification on the trade.
Gold prices are falling as we have broken an important resistance at $1240 and then the support at $1220. Next stop is the psychological support at $1200.
Gold saw a lot of sell pressure from the break of 1240 and the buyers moved in initially at $1220 but lost their resolve after a move up to $1230 which was an almost perfect 50% retrace of the previous move.
Gold is in a downtrend from mid June and produced what is called a death cross. This occurs when the 50 moving average breaks under the 200 day moving average. When price was consolidating around the $1245-60 area sell volume was increasing on every push and the support was weak.
The longer term supporting trend line was also broken. The Long term H&S pattern is playing out. We could see a bounce from 1210 mark but this could be a rest before the next push down. We have had many bearish patterns forming and I would not go against the trend.
It is easier to keep shorting the retracements or using an inverse ETF like $JDST.
Be careful as this is a leveraged ETF and you can loose all of your account or more.
Silver Flash Crash and Gold prices falling is not a recommendation for trading. Trading is very risky, and traders should be able to manage their risk and understand the risks of trading before trading. Silver trading can create losses greater than your account value. Gold trading is also very volatile and you can loose more than your account value.
This is not given as advice but as an observation, in order to trade you must be able to do your own work and understand the outcomes of your decisions in Trading.