The silver market initially fell on Wednesday but found enough buyers to turn things back around. Furthermore, the inflation numbers coming out the United States were much stronger than anticipated, so it does suggest that perhaps there may be more demand for assets and less demand for paper. Silver was a major beneficiary to this move initially, piercing the crucial $25 level. That being said, we have not stayed above the $25 level, and that is something that you must pay attention to. While silver certainly can continue to go much higher, it is likely that the market may struggle a bit. After all, the $25 level has a lot of interest paid to it and could also bring in a lot of options barriers.
While we did pierce that level, we did not manage to stay above it. It comes down to whether or not we can break above the $25 level on a daily close, which would be extraordinarily bullish, and it could open up the possibility of the market going much higher over the longer term. That being said, though, the market is struggling to stay above the area, and although we did pierce that market, we have also given back almost all of those gains. That is a very ugly look for silver in general.
The question now is whether or not we just formed a “blow off top”. The market is likely to see a lot of noisy behavior, and it is worth noting that there is significant support just below near the $24 level, so as long as we can stay above there, I would anticipate that there will be a certain amount of interest. After all, the industrial demand for silver will continue to be a major driver, so I think we still have a potential upside move, despite the fact that the US dollar has been extraordinarily strong. With this being the case, I think you need to pay attention to the overall trend, and it is worth noting that we are trying to form a bit of an inverse head and shoulders. If we were to break above the top of the candlestick from the trading session on Wednesday, then it would be a very strong sign, not only breaking previous resistance, but also breaking the top of the melt down during the session.
