Potential Signal:
- I’m a buyer silver on a daily close above $37.50.
- If we can break above there, then I would have a stop loss at $36.75, aiming for $39.25 above.
The silver market rallied significantly during the trading session on Thursday to reach the $37.50 level. This is an area that’s been important more than once, and therefore you need to pay close attention to it, because we can break above there, then silver is free to truly take off to the upside. Ultimately, this is a market that continues to see a lot of buying every time it dips, and it is worth noting that we have been consolidating for a while, perhaps working off some of the excess froth that we had seen for the initial shot higher.
Technical Analysis
The technical analysis for this market is of course very bullish, but recently we see more of a grind sideways. I think that makes a certain amount of sense, mainly due to the fact that the markets have got so far ahead of themselves, and of course we have to worry about all of the external factors that will almost certainly have a major influence on silver. After all, silver is negatively correlated to the US dollar which of course has been fighting back as of late, but I think ultimately, we also have to pay attention to the industrial demand of silver, as the economy continues to be fairly strong, all things considered.
If we were to pull back from here, I suspect that there is a ton of support at multiple levels, starting with the $36.50 level, followed by the $36 level, the 50 Day EMA at $35.20, and finally the $35 level. As long as we can stay above the $35 level, I have no interest whatsoever in shorting silver and believe that each and every dip will continue to attract more buyers looking for cheap entries into a market that has been so obviously bullish. The markets continue to look like they want to break out, I think it’s probably only a matter of time before that actually happens. If and when it does, I would anticipate that silver is racing toward the $40 level based on the “measured move.”
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.