Silver Showing Signs of Exhaustion

NEW YORK (April 17) Silver has done very little during the trading session on Monday, as we continue to dance around after selling so drastically on Friday. By doing so, it looks as if silver is going to continue to be very noisy, but if we break down below the bottom of the candlestick for Monday, we will more likely than not go looking toward the $25 level. The $25 level is a large, round, psychologically significant figure, and therefore you need to pay close attention to it. If we break down below there, then it’s likely that we go down to the $24 level, which is right in the middle of the previous consolidation area.

If we do pull back from here, then it’s possible that we could get a nice supportive looking candlestick that we can start buying again. After all, the market has been very noisy lately, but it has been decidedly bullish. Because of this, you need to look at it through the prism of the market that is going to offer lots of opportunity, if you wait just a bit. Ultimately, the 50-Day EMA sits near the $23.50 level, and is rising. I think that given enough time it’s likely that the buyers will come back in to pick a “cheap silver.”

The alternative scenario is that we turn around and break above the top of the candlestick from Friday and take off to the upside. The $27 level would be the next target, and if we can get above that area, it opens up a huge “air pocket” that could open up a move to the $30 level, followed by the $50 level as we have seen attempted in the last couple of major bullish markets.

If we turn around and break down below the 50-Day EMA, it could change a lot of things, but we are nowhere near there, so I think that is something that you should keep in the back your mind, but it’s very unlikely to happen in the real world anytime soon. Because of this, I think this is going to remain a “buy on the dip” type of situation going forward.

FXEmpire