Silver Forecast December 24, 2012, Technical Analysis

The silver markets went back and forth during the session on Thursday as the market continues to flirt around with the $30.00 level. This area should continue to be relatively supportive because of the “big round psychologically significant” number, and the fact that it was once the site of a significant gap.

If you have been reading our articles, you know that we are bullish of silver in general. The last couple of weeks have been very difficult for those who are bullish for silver, but this is more of a seasonal trade than anything else. Every December, we see traders sell off markets that have done quite well in order to do what is known as “window dressing” at the end of the year in order to have something good to present their clients. Quite often, this is the precious metals markets that get whacked the hardest, as the volumes dry up as well.

Having said that, quite often in January the same traders buy the precious metals in order to reenter the trade. After all, it’s not like the Federal Reserve is going to stop printing money, nor will the European Central Bank or the Bank of Japan. Because of this, long-term the metals markets will continue to do very well.

As far as trading this from a short-term perspective, the next couple of sessions will be very difficult because volumes will be so then. After all, today is Christmas Eve, and of course has abbreviated trading hours. With this in mind, most major players in the markets are simply not going to be around in order to push prices in one direction or the other.

With these then volumes, you can see very erratic and suddenly significant moves at the drop of a hat. Markets continue to have issues as the “fiscal cliff” talks, or lack of, dominate the headlines. With all that being said, you have a perfect storm where traders simply do not want to take much risk. This is compounding the usual December sell off that we see, and as such the fall has been exaggerated. However, looking at the fundamentals in the long term technicals, there’s no reason to think that silver will continue to rise into the new year.