Silver markets fell pretty significantly on Friday, as we had seen a lot of “risk off behavior” around the world. Silver would struggle in that type of environment, as it is a very volatile asset. Keep in mind that the coronavirus variant in South Africa has made traders nervous, and they started to focus on the possibility of lockdowns. If we do get those lockdowns, then the industrial demand for silver falls.
You can see that we stopped right at a major uptrend line, so it will be interesting to see whether or not it can hold. If it can, then the market is more than likely going to bounce from here and go looking towards the $24 level. However, that would be a bit surprising to happen right away. A lot of this will come down to whether or not the world thinks that the South African coronavirus is going to cause some type of major meltdown. If it does not, then this could be an excellent opportunity.
Keep in mind that the Friday session was a bit thin, as it is the day after Thanksgiving. This could have led to a lot of the selling pressure, as we are to simply warrant as many traders involved. Because of this, the market is going to have to figure out whether or not the momentum can keep them, but at this point I think that you are best sitting on the sidelines and waiting to see what today brings. At the end of the day today, we should have quite a bit more clarity, but if we do close below the lows of the trading session on Friday, then it is likely that this market would continue to go lower, perhaps reaching towards the $22 level. That is an area that has been massive support more than once, and it is likely that there would be a lot of interest in that general vicinity. Because of this, I think that you have to watch in that area to see whether or not we fell apart completely. If we did, then it could lead to a massive downtrend in this market. The silver market is extraordinarily volatile, so you need to be cautious about your position size regardless.
