- Silver has gone back and forth during the trading session on Monday as we continue to see a lot of noisy behavior.
- It looks as if the $29.50 level is an area that a lot of people will be paying close attention to.
With that being the case, I think we continue to see buyers jump into this market in order to try to find some type of value, and it’s probably worth noting that silver had been massively oversold on Friday. The question at this point in time is going to be whether or not silver will recover, or if something actually changed on Friday.
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The main reaction on Wall Street was utter shock and dismay that there is inflation in the United States. For the roughly 300 million of us Americans that live outside of the New York City metro area, we knew this. However, it appears that the machines and the trading public in New York just learned this on Friday. The question now is whether or not they believe it is something that is actually something to worry about, or if they are going to simply by the dips yet again.
Silver is particularly sensitive to a lot of this noise, due to the fact that it is a thinner contract than gold, and of course it is also an industrial metal, so that does make it a little bit different. In this environment, silver is going to be very noisy and difficult to hang onto, so you need to be cautious with your position sizing. Silver is absolutely brutal on a lot of retail traders, so therefore you need to make sure that you are particularly cognizant of your risk.
Underneath, we have the 50-Day EMA coming into the picture to offer support. The $28.50 level underneath there offers support also, as it is an area that previously had been resistant, and therefore I think a certain amount of market memory is coming into the picture in that general vicinity. All things being equal, I am still positive on silver, but I don’t feel the need to go “all in” at the moment.
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