Since pulling back to test support of its 50-day moving average on July 3, the ProShares UltraShort Silver ETF ($ZSL) has reclaimed near-term support of its 20-day exponential moving average (EMA) and has been consolidating along this key mark for the past eight sessions. On July 12, this inversely correlated “short ETF” formed a reversal candle as it “undercut” support of its 20-day EMA (circled in pink), but recovered to close near its intraday high.
Undercuts below obvious technical levels of support, just as what occurred on July 12, cause the “weak hands” to sell their positions at the first hint of trouble. This, in turn, absorbs overhead supply, which subsequently enables the ETF or stock to move higher in the near-term. As such, a volume-fueled move above yesterday’s (July 16) high of $68.60 could present a near-term swing trade buying opportunity in this ETF. As such, we have placed ZSL on the watchlist section of today’s Wagner Daily trading newsletter. Regular subscribers to this swing trader service should note our detailed entry, stop, and target prices in that section of the report. The daily chart of ZSL below uses basic technical analysis to illustrate the trade setup:
If you are new to ETF trading, please note that ZSL is an inversely correlated “short ETF.” This means that ZSL is a bearish ETF designed to move higher in price as the underlying price of spot silver commodity moves lower (at approximately double the percentage rate of the underlying index). With many “short ETFs,” particularly the leveraged ones such as ZSL, there tends to be an underperformance of the ETF, compared to the index it is tracking, as the holding time increases. As such, if it triggers for buy entry, ZSL is intended to be held for a shorter than usual length of time (approximately 2 to 5 days).
The commentary above is an excerpt from today’s Wagner Daily swing trading service. For your 30-day risk-free test drive to this daily, end-of-day stock trading newsletter, which is based on our winning swing trading strategy, click here to get started.