Potential Signal:
- I’d be a buyer of silver right here. I wouldn’t risk too much, and I would also have to keep in mind that the market might be noisy for a while.
- However, if we can break above the $31.50 level, I would be adding to a position.
- I do have a stop loss near the $29.75 level.
In my daily analysis of the commodity markets, the silver market has stood out due to the fact that we are hanging around a large, round, psychologically significant figure, which has been obviously support for some time.
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Furthermore, the technical analysis lines up quite nicely for this market, so therefore I think we’ve got a situation where a lot of value will start to be thought of as being offered.
Technical Analysis
The technical analysis for the market has been very bullish for some time, but recently we have seen a bit of consolidation. That being said, typically consolidation will lead to some type of continuation of the overall longer-term trend, but beyond that we have a lot of reasons to think that the technical analysis suggests that we could go higher. After all, the $30 level is an area where a lot of buyers will be interested due to the fact that it is a large, round, psychologically significant figure, an area that has a lot of “market memory” attached to it, and of course a lot of options traders will be looking at this large figure for some type of play.
Furthermore, we also find ourselves halfway between the 200 Day EMA below, and the 50 Day EMA above. Typically, when the market hangs out between these 2 moving averages, you sooner or later will have a bigger move. Furthermore, we also have the uptrend line underneath that has been very reliable for the entirety of the year, so I think it all lines up for a more likely than not bigger move to the upside than anything else.
This is not to say that silver will simply take off and start rallying, but I think what it has the likelihood of is a market that is going to try to build up some type of base that we can take off eventually. The 50 Day EMA sits just above the $31 level, and then of course we had seen quite a bit of resistance at the $31.50 level. Anything above there, the market is likely to continue going much higher. Regardless, I like silver here and I believe that the risk to reward certainly works out in your favor.
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