Silver Markets Have a Vicious Pullback

Silver markets have rallied significantly over the last several days, but it now appears that the market has seen enough demand destruction to stabilize things a bit. With this, I think the market probably continues to see a little bit of upward momentum over the longer term, but we just had gotten too far ahead of ourselves to think that the momentum was going to keep up. Looking at this chart, you can see that we had gotten a bit parabolic.

SILVER Video 10.03.22

On the downside, I believe that the $25.50 level could be an area of support. I would like to see this market pull back a bit further before it started buying again because we quite frankly have far too much in the way of momentum being expended at the moment. To the upside, the $27.50 level has offered resistance, and as a result, it is likely that we will struggle to get above there. Certainly, we had gotten there far too quickly to make it sustainable, so I think at the very least we are looking to expect some type of pullback.

For what it is worth, the 50 Day EMA is starting to reach above the 200 Day EMA, forming the so-called “golden cross.” In general, silver needs a significant pullback to make it even remotely attractive at this point. Furthermore, it is not the safety play that gold is, so it will follow whatever happens in the gold markets. In general, this is a market that I think has gotten far too hot to hang onto so if you are already long of silver, it is time to start thinking about taking profits.

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