Silver Markets Technical Analysis
Silver has fallen again during the Monday session, as we continue to see a lot of negativity. That being said, we are also at the top of the major consolidation area, so that of course is something worth paying attention to. With this being the case, I think we probably go looking to the 50-Day EMA, an area that of course a lot of people will pay close attention to. Breaking down below that level then opens up the 200-Day EMA, and then possibly the $22.50 level after that.
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All things being equal, we could rally from here but it looks as if the $25.50 level continues to offer a lot of resistance, and right now we just don’t have a reason to do anything along the lines of a longer-term “buy-and-hold” strategy, it looks like we are just simply hanging around in this same range that we have been in for most of the year.
The biggest driver of where silver goes next is going to be the Federal Reserve, and interest rates coming out of that central bank. If interest rates do in fact start to drop, then it’s likely that the market would probably go looking to send a silver much higher. In general, the market is likely to see a lot of volatility, but if we could break out above the Wednesday candlestick of last week, then it’s possible that the silver market goes looking to the $26.50 level.
In general, this is a situation where I think you continue to see a lot of noisy behavior, and of course silver is known for being so violently volatile anyway. You need to be cautious with the position sizing, as sudden moves in the futures markets of course can cause a lot of trouble. You should also keep in mind that the Monday session was Labor Day in the United States, so there was a serious lack of volume. This will pick up again during the trading session on Tuesday, but at this point it looks like we are simply seeing a lot of profit-taking at the top of the range that a lot of people were very well aware of.
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