- Silver fell rather hard during the trading session here on Tuesday, as we continue to see a lot of noise.
- At this point, it looks very much like a market that wants to fall towards the $28.50 level, an area that features not only the 50 day EMA, but previous support as well.
There are a lot of concerns about the economy out there. Unlike gold, silver is a significant industrial metal. So, if the economy starts to fall apart, the idea is that demand will drop. Whether or not that's the case remains to be seen, but really ultimately this is a market that's in an uptrend and it looks like it's in the midst of trying to fall. The $28.50 level has been important multiple times and therefore I would not be surprised to see a bit of a bounce there.
On the Upside…
On the other hand, if we were to turn around and take off and clear the $30 level on a daily close, I think silver will continue to go higher. I don't have any interest in trying to short silver at the moment, just because it's so bullish. This could be a little bit of profit taking, but regardless, keep in mind that silver is an extremely volatile asset, and in times where people like Wall Street traders suddenly realize that the economy isn't doing well.
You get this type of action. Silver has a long history of crushing those that are trying to shoot the market through the ceiling. So, this is not a surprise. And I do expect sooner or later we get some type of vicious fall. That being said, I don't know if that's right now. I think you have to be very cautious, but it certainly looks as if silver is in a state of flux right now.
The best trade is probably just to be on the sidelines. At this point in time, you are better off letting the market decide what it wants to do, and then simply following. In this type of erratic machine driven trading, retail traders can get hurt.
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