Silver markets fell during the session on Friday again, but did something that has me thinking that taking a bit of risk at this point might be worth it. After all, we ended up bouncing enough to form a nice-looking hammer that is sitting right at the $18.50 region. We are at the very bottom of support, and we have been dropping so drastically that I cannot help but think silver markets are probably going to bounce based upon the fact that we have a hammer, and we are at the very bottom of the overall range for the last year or so.
I’m not necessarily calling for some type of massive buy-and-hold situation, but we do recognize a bounce above the top of his hammer probably sends the market to the $19.00 level at the very least, and possibly even as high as $20.00 level. With that, I would also be willing to sell a resistant candle up in one of those areas.
However, there are others scenarios.
It’s possible that we break down the bottom of the hammer, and if we get below there, it’s very likely that this market then falls apart. You start to think about lower levels of that point, probably heading to $15.00 level, and possibly even as low as $13.00 below there. If that’s the case, I would be aggressively short of this market in the futures or CFD markets, but all along looking for physical silver as I believe that longer-term silver will of course rise in value. It has far too many precious metals and industrial components to think of this market will go higher given enough time.
I would think of holding onto physical silver is more or less an investment than anything else. So in some sense, I could find myself selling the futures market, while buying the actual underlying instrument itself. I would be buying it as I have recently, just small amounts at a time. Maybe 10 ounces or so, and let the market go back and forth and perhaps offer me more value.
