Silver Price Outlook – Silver Continues to Look for a Floor

Silver Technical Analysis

Silver has crashed into the $47 level, an area that I think needs to hold at this point in order to keep the trend somewhat healthy. Quite frankly, after a couple of really nasty candlesticks in the last four trading sessions, suddenly, silver looks very vulnerable. If we do break down below this $47 level, then we could go looking to the 50-day EMA. A breakdown below that level opens up a deeper correction to the $40 level. Short-term rallies are likely to be possible, but the $50 level above probably ends up being a little bit of a barrier.

If we can break above there, then okay, fine. Maybe the longer-term trend is still intact. But ultimately, I think what we’re looking at here is a market that’s in flux. And after this type of damage, it makes quite a bit of sense that people are a little bit nervous. Why wouldn’t you be after these types of gains? Furthermore, if we start to see other markets fall apart, you may see profit-taking in silver markets in order to cover those losses.

A lot of what we’re seeing out there is typical top-of-the-bubble behavior, where people are lining up to buy silver outside of bullion dealers. And once the general public gets involved, that’s generally a good sign that we’re nearing the end. That isn’t to say that I want to short silver, although if we break down below $46, I probably will. I do have puts out there for silver via ETF markets, but really, at this point, I think you’ve got a situation where a little bit of a bounce and signs of exhaustion could be a selling opportunity.

We’ll just have to see how the market behaves if it does, in fact, try to correct and fail. A little bit of caution and a lot of patience probably go a long way here.

For a look at all of today’s economic events, check out our economic calendar.