Silver Price Outlook – Silver Continues to See Wild Swings

Silver Technical Analysis

Silver had a wild ride throughout the early part of the trading session on Thursday, as we fell pretty significantly to reach $86.20 or so before bouncing. As New York is waking up, we are at $91.20. This market had at one point been at the $93.50 area, so a wild move indeed.

I think you can count on these types of moves quite often, and therefore, you do have to be very cautious with your position size. I always say that about Silver because Silver can move so rapidly out of the blue, but in this move that we’ve had, especially since the $50 level, I’ve seen levels of volatility that are just going to end up being gut-wrenching for most retail traders who do not understand the volatility profile of this market.

I still think that we’re going to try to get to the $100 level eventually: it’s just too big a target. But whether or not we get there soon is a completely different story because we do get these occasional washouts, and I think that’s hurting a lot of traders. Retail traders, unfortunately, see this and start thinking about getting rich overnight, and they over-leverage their position, and one candlestick like that can take you out of the market and out of your account, unfortunately.

Margin Adjustments and Supply Issues

I anticipate that the CME is going to have to continue to adjust the margin. That will have an influence on the futures market. The spot market, of course, is starting to see various signs of a lack of supply. I do think that continues to be a major issue. I also think it gets fixed eventually.

However, right now it looks like things are moving too quickly for the actual physical market to catch up, so it’s going to be more of the same. Anytime this market pulls back, you have to be looking at a potential buying opportunity on the chart. The $80 level now is the floor in the market, and really, we could fall to the $80 level today, and it really wouldn’t change much. That’s how bullish this market has become.

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