Silver Technical Analysis
The silver market initially fell a bit during the trading session on Monday, only to turn around and show signs of strength. Ultimately, this is a market that continues to watch the $70 level very closely as it is a large, round, psychologically significant figure and an area where there would be a lot of options trading, and of course, previously, we have seen a lot of action.
Volatility is almost guaranteed
Interest rates will be the key here, especially the US interest rate market, so pay attention to the 10-year yield. If it starts to drop, that will help metals, but if it starts to rally again, that could be a problem. While I think we are in the midst of trying to find the floor in the silver market, I don’t know if we have actually found it yet.
We are in a wait-and-see type of mode, so be cautious. If you are involved in the silver market, the most important thing you can do is keep your position size reasonable because, quite frankly, volatility is almost guaranteed in this market as the current environment stands.
If we were to break down from here the 200-day EMA is your line in the sand. If we break down below that indicator, I think we will probably go looking to the $50 level before it is all said and done. War headlines are what’s driving the bond market, and as those rates go higher, worrying about energy shocks and inflation as a result, that weighs on metals. It would only take 1 or 2 random headlines to get silver to start selling again. Be careful is the message.
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