Silver Price Forecast – Silver Markets Break Down SignificantlyThe silver markets broke down significantly on Tuesday, as the massively overbought condition finally came home to roost.
When I look at the silver market, I can see how a lot of retail traders got their heads handed to themselves during the day. After all, silver is down over 4% early in the day, and it is a highly levered contract. I personally know of a couple of newer traders who have just gotten their face ripped off in both the gold and silver market, chasing the “FOMO” that is so prevalent. Unfortunately for a lot of these traders, they will have done lasting damage to their accounts.
SILVER Video 12.08.20
This is what makes silver so dangerous because it is highly levered, and volatile to say the least. Even with the candlestick that we have formed during the trading session on Tuesday, my analysis has not changed: this is a market that you buy on dips. Quite frankly, I would love to see silver drop down towards the $25 level, an area that is a large, round, psychologically significant figure, and of course the previous resistance that was so difficult to get above.
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Now that we have broken down significantly, I think that this will have scared out a lot of the “weak hands”, unfortunately some of my new friends, and now the longer-term trend will be able to continue. I still think we have some downward pressure ahead of us, and I certainly would not chase it here. I would be more interested in buying closer to that previously mentioned $25 level, and I think it makes quite a bit of sense that we are trying to build up the momentum to finally take on the $30 level.
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