Silver Forecast: Targets $28.50 as Volatility Rises

• In my daily silver analysis, I can see that the asset has reached quite drastically to the upside as it looks like we are going to continue to threaten the $28.50 level.
• This is an area that has been important multiple times in the past and therefore I think a certain amount of “market memory” will come into the picture.
• Furthermore, we also have the 50-Day EMA sitting just above that level, and it could cause a bit of resistance.

Speaking of the exponential moving average, the reality is that the market has bounced around between the 50-Day EMA and of course the 200-Day EMA underneath. This typically causes a bit of a squeeze in the markets, and therefore I think you’ve got a situation where the volatility will probably only continue to grow. That being said, you should also keep in mind that silver is not gold, and therefore it will react to a few separate things.

Industrial Usage

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Keep in mind that the industrial usage case for silver continues to be a major driver, and therefore you need to be very cautious about the overall leverage as you apply to this trade, because industrial usage case scenario could be all over the place right now. While traders are starting to focus on the idea that the US dollar is going to be a major driver of where we go next. Remember, this market does tend to cause a lot of damage to retail traders, because they don’t understand that it doesn’t necessarily follow gold tick for tick, and of course this is what gets people into trouble as they not only don’t understand that the correlation isn’t 100%, but they also don’t understand that the contract size for silver is much larger than it is for gold.

With that being said, it does look like this remains a “buy on the dips” situation, and I do recognize that the 200-Day EMA underneath will more likely than not offer significant support for any pullback, just as a move above the 50-Day EMA could send this market much higher.

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