Volatility in the markets continues to grip investors, with a particular focus on the silver commodity. With the recent bull market heavily concentrated in just a few stocks, any sign of weakness in one can trigger a domino effect across the entire market. This makes monitoring market breadth crucial when trading stock indices.
One way to monitor volatility in silver is by using the average true range (ATR) multiplied by $/points. For the 1000-ounce Silver futures contract, every penny move equates to $10, with an ATR of 94 cents per day. This means that on an average day, one can expect to see a $940 fluctuation per contract. However, Thursday’s outlier saw a daily range of $1.53 or $1,530 per contract, signaling heightened volatility.
The directional movement indicator (DMI), created by J. Welles Wilder, measures range expansion over a given period and indicates the strength of upward and downward price movements. A crossover of the positive directional movement indicator (+DMI) and negative directional movement indicator (-DMI) often precedes a significant increase in volatility.
For those interested in detailed analysis and insights on gold and silver trading, the Metals Edge by Blue Line Futures offers trend changes, entry and exit points, seasonal tendencies, and option strategies. Traders can sign up for a free two-week trial to access this valuable resource.
As the market navigates fluctuating prices and potential corrections, keeping a close watch on key levels and actionable trade ideas can help investors make informed decisions. The Metals Minute video series provides daily updates on gold, silver, copper, crude oil, and the S&P 500, offering valuable insights for traders looking to stay ahead in these volatile markets.
