Silver markets initially went sideways on Tuesday but then fell significantly. We found enough support near the $16.60 level to turn around and form a hammer on the hourly chart, which is a very bullish sign. Bouncing from there is an even more bullish sign, and I think it shows that the US dollar will continue to weaken in the short term. The market should continue to see buyers underneath, so I think it’s only a matter of time before the buyers return on pullbacks. I recognize that the employment figures come out on Friday, so we could get a bit of volatility as traders tried to from Ron US dollar weakness. Currently, I look at the $16.50 level is a bit of a “floor” in the market, and as long as we can stay above there it’s likely that we should continue to go even higher.
My short-term target
My short-term target is the $17 level, so buying on pullbacks will probably be the best way to go as Silver tends to be volatile. By adding small positions, you can build up a larger position to take advantage of what is obviously a very strong uptrend. Given enough time, I believe that we are going to break above the $17 level, so with this being the case I think that if you are working on a longer time horizon, you could probably aim for the $18 level, or even the $20 level but I would not expect to see that anytime soon, that is a longer-term call, and lends itself for people who are using lower leverage as it is a bit of a “buy-and-hold” play. If we were to break down below the $16.50 level, the market probably goes looking for the $16.25 level after that.