Silver Technical Analysis
The silver market has rallied a bit in early Wednesday trading, as we rallied a bit to reach the $52 level, but gave back gains. I think at this point in time, we have to be very careful because the candlestick during the previous session certainly suggested that somebody’s out there pushing back on silver. And if that’s going to be the case, it’s going to be very crucial to be cautious with your position size while gold looks fairly strong, silver looks like it’s asking serious questions.
That makes sense because they aren’t in the same market, despite the fact that most people will try to treat them that way. Silver isn’t a precious metal, not really. It’s an industrial metal. It’s a different set of circumstances. This is partly driven by the AI bubble. It’s partly driven by the fact that people see gold as being too expensive.
I’m starting to hear random strangers talk about silver in the real world who clearly aren’t traders. This screams be careful in this market. If we break below $48, which would require a significant effort in the short term, I think that could lead to a pretty massive liquidation. Remember, silver is a highly levered product. So, when things go wrong, they go wrong quickly, and they go wrong in a spectacular manner, as we had seen during the Tuesday session. The question now is, can we just stabilize in this area? If we can stabilize in this area and spend some time right around $50, maybe the market gets comfortable up here and we can continue higher. One thing’s for sure; this is one of the most dangerous markets I follow right now.
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