The silver markets tried to rally during the session on Monday, but as you can see really struggled to keep any gains by the end of the day. With that being the case, it appears that the market is going to struggle to continue going higher but what I find most interesting is that the $20 level has been so resistive and is just above. On top of that, the 100 day exponential moving average has acted as resistance during the session on Monday, so I think there’s probably going to be some downward pressure over the next couple of sessions.
If we can get below the bottom of the candle, which is essentially the $19.58 handle, I think that the market will probably drift back down towards the $19.00 level given enough time. That is an area that’s rather supportive though, so I think that it is going to be a short-term set up at best. I know that we are most certainly in a downtrend, but we have already seen bargain hunters step into the market in that general vicinity.
This looks a lot like basing to me.
I can’t help but think that the market looks like it is trying to form some type of base at the moment. A lot of times it will take quite a bit of time, and with that it wouldn’t surprise me if we eventually went much higher. This is especially true considering that we had seen such an impulsive move over the last couple of weeks, but ultimately I think you’re getting to fairly lofty levels at this moment in time as the market is still most decidedly in a downtrend.
That being the case, it is going to take a momentum shift and some significant strength to breakout to the upside. This is why I believe that a short-term selling opportunity exists, as the market pulls back to find new buyers. I would also be interested in buying this market on a hammer near the $19 handle, and could in fact do both of these trades over the course of the next week or two.
