Silver markets have had a horrific day during the trading session on Tuesday, reaching down towards the $26 level. At this point, I think it is only a matter of time before silver find buyers because we are in a bullish uptrend for reason. However, the market had gotten far ahead of itself so it makes quite a bit of sense that we pulled back the way we have, and that being said this is a horrific looking candlestick that should probably have a bit more follow-through.
The $25 level of course is a large, round, psychologically significant figure, but the type of selloff that we have seen could have the ability to break down even below that level. I would love to see silver get closer to the $22 level and I’d be much more aggressive about buying it down there. Nonetheless, you cannot jump in blindly at $25, not after the type of selloff that we have seen. In fact, silver has dropped over 12%, causing mass chaos.
Nonetheless, silver is also extremely volatile, so it is not a huge surprise that it has fallen much more than gold. That is the trick with silver, it moves quickly so if gold is falling, silver will absolutely crater as we have seen. My trade plan is to buy silver on that dip, but I need to see some type of stability. The $25 level is in fact a potential opportunity, but I need to see a daily candlestick that tells me that the selling is done. Right now, we are nowhere near that possibility.
This is a market that could find itself down several dollars from here as well, and these are the type of moves that absolute nightmares are made of. Unfortunately, a lot of retail traders have been caught in this move so I believe at this point in time it is likely that we will see a lot of pain out there. This is the reason why a lot of retail traders do not get involved in silver and I suspect that there have been a lot of blown-up accounts in the last 24 hours. That being said, if you are patient enough you should be able to find a nice buying opportunity but parabolic markets are not the way to trade and go long. Chasing the trade is a great way to lose money, and the Tuesday session has been an example of that.
