Silver Price Outlook – Silver Drops Again on Friday

Silver Technical Analysis

The silver market has fallen just a bit during the early hours here on Friday, as it looks like we are threatening the $47 level again in the futures contract. The market has seen a huge divergence between spot price and futures, but that is tightening back up. At this point in time, it looks like we are just about 25 cents in backwardation. That’s a good sign because it suggests that one of the markets is starting to come back to reality, as spot has gotten way out of control there for a while. If we break down below the $47 level, then it opens up the possibility of a move down to the 50-day EMA just above the $45 level.

Ultimately, though, short-term rallies open up the possibility of fading those rallies at the first signs of exhaustion. With that being said, I like the idea of perhaps taking advantage of a rally that shows signs of exhaustion that I can sell into. As far as buying is concerned, once we get above $50, I might consider that, but we’ll just have to wait and see.

We’ll need some sideways action here in order to stabilize the market that has gotten way too far ahead of itself. Because of this, I think you will have to find value before getting aggressive to the upside, but we also have to ask questions as to whether or not the trend is dying at the moment. Ultimately, we are in a dangerous spot, and you should be cautious at this point in time.

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