Silver’s Key Moving Average Crossover | RJO Futures

April 13, 2017 9:26AM CDT

A moving average is the average value of a market’s price over a defined time period, and can mark important support and resistance levels in the market. The basic concept is to be long when the market is trading above the moving average, and short when below. The most common moving averages are the 50-, 100- and 200-day, although traders use other numbers. You can use whatever you are comfortable with to gain a unique edge.

The moving average crossover is a trend identification tool that compares different moving averages. It provides a trading signal when momentum shifts directions. When a shorter moving average crosses a longer one, the trend is seen as up. When a shorter moving average crosses below a longer one, the trend is seen as down.

Moving averages do give a delayed signal, because they are computed using historical data. Using end-of-day data is more useful for some traders, because there can be an intraday crossover that could give a less reliable signal.

In the May Silver chart, we did see the Blue 50-day moving average cross the Red 100-day recently as the market began to rally, and it seems as if the Green 200-day moving average would show that silver is starting a bull trend. If the market trades above the 200-day for a few sessions, that reinforces a bullish shift we were seeing with our other indicators.

May '17 Silver Daily Chart

May '17 Silver Daily Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.