Silver Forecast: Jumps as Rates Fall

• Silver experienced a surge in its trading value on Monday as global interest rates dropped, primarily in the United States.
• This has given a boost to precious metals and put negative pressure on the US dollar.
• Traders are placing bets that the Federal Reserve will have to start easing its monetary policy to bail out failing banks like Silicon Valley Bank.
• However, it is too early to determine whether this is the case, and this may lead to a potential vicious move to the downside.

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Technical analysis shows that silver has bounced significantly from the 61.8% Fibonacci level, indicating a positive sign. However, the move on Monday is overdone, and it is not advisable to chase the market by buying here. Traders may want to consider taking a little bit of profit, regardless of what happens next, if they already own silver.

Currently, traders are pricing interest rate cuts, which is putting pressure on the Federal Reserve to take action. But until the Federal Reserve officially announces its policy changes, it is unwise to make any assumptions. If we do break above the $22.50 level, then it could open up the possibility of a move all the way to the $24 level. However, it is important to note that there is a gap in that same general vicinity, and the 200-Day EMA and the 50-Day EMA will likely offer resistance.

Position Sizing Will be Crucial

It is crucial not to chase silver all the way up here as silver is exceptionally volatile under the best of circumstances. Rather, traders should wait for an exhaustion candlestick before selling the market. If traders wait to sell the market, they may not miss out on the potential opportunity for profit.

Silver's trading value exploded to the upside on Monday, and traders are betting on interest rate cuts by the Federal Reserve. However, it is still too early to determine if this is the case, and it may lead to a potential vicious move to the downside. Traders should not chase silver's current value and wait for a sell signal before making any moves. By doing so, traders may avoid missing out on a potential opportunity for profit while minimizing risk, as silver is so noisy under the best of circumstances. Position sizing will be crucial at this point in time.