Potential signal:
- Silver fell rather hard during the early hours on Tuesday. But really at this point in time, we have seen buyers jump in a couple of different times during the day, so it will be interesting to see if this holds.
- A lot of what traders are paying close attention to is the FOMC meeting on Wednesday. So perhaps this is the market trying to get out of the way of anything that Jerome Powell says.
I do think that there are supportive areas underneath that people will be paying close attention to, which of course starts with the $29 level. But I think underneath there you have the 50 day EMA that is important, and then the $28.50 level that has shown itself to be important multiple times in the past. The reality is we will get a lot of our answers after the FOMC meeting, and therefore, I think the next 24 hours are probably a bit erratic at best. However, if we were to turn around and recapture the $30 level, it would be a huge coup for the buyers and it could really send this market much higher.
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We Are Still in an Uptrend
We are still in an uptrend, despite the fact that it's been brutal for the last couple of days, but we certainly are starting to ask some serious questions about silver overall. Keep in mind that silver is an industrial metal as well as a precious metal, so it does have a little bit of a different attitude in general than gold, so you can't really extrapolate one to the other anymore.
That being said, when precious metals sell off, silver gets absolutely crushed. In fact, it is much more volatile and much more dangerous than gold. And that's exactly why a futures contract has much more margin for silver than it does gold. So, you should extrapolate that into your CFD trading, recognizing that your position sizing needs to be very reasonable. We are approaching a point of inflection, and I think a lot of longer term trades are about to kick off. It's our job to watch and follow.
- IF we are above $28.50 after the FOMC press conference on Wednesday, I am a buyer of silver, with a $1 stop loss, and will be aiming for $32.50 above.
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