Silver Weekly Price Analysis – Silver Has a Tough Week

Silver Markets Weekly Technical Analysis

The silver market has had a gnarly week to say the least, as the market initially tried to break out but then slammed back into the $80 level. When you look at the weekly chart and also the daily chart—but definitely the weekly chart—it’s obvious that the $80 level is an area that’s important. It has been held so far, and quite frankly, on Friday, it doesn’t look like it’s going to get broken significantly.

So, the question then becomes, are we in the midst of trying to find our new normal? Maybe. I do recognize that the volatility in silver has been very difficult to deal with for most retail traders. And the only answer to that is to keep your position size reasonable. As things stand right now it is still technically a bullish market, but it is a parabolic market that is now searching for some type of sanity.

Stability and Support Levels

I think we’re finding that, and right now, the biggest candidate for stability is right around the $80 level. If we do fall from here the $70 level should be significant support; anything below there on a weekly closing probably has silver unwinding to the $50 level. The $50 level historically has been very significant resistance, so it should, at least in theory, be significant support if and when we reach that level.

To me, it’s obvious that the bubble has popped in silver and now we’re going to start focusing on the actual supply and demand constraints. That should be bullish for silver over the longer term but we had fallen from such an astronomical level that quite frankly I’m a bit concerned that some of those people who bought silver at $120 are going to be much like the people who bought silver at $50 back in the 80s where they just sat on that silver forever to get back to break even nominally and really when you take into account the inflation just didn’t keep the position positive.

So, with this, I think you have to be very cautious about getting aggressive here. I think we’re going to end up sideways for a while; there will be an obvious move, but we just aren’t there quite yet. It is worth noting, though, that the red candles are definitely bigger than the green ones, and that in and of itself might give you a heads up.

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