The silver markets initially tried to rally on Friday but gave back gains as the $22.60 level continues to be a bit too much to overcome. That being said, I think the biggest problem that the silver market has right now is that it simply rallied too quickly. In other words, we probably need to take some type of break in order to build up enough momentum to try to go higher, assuming that is what we ultimately end up doing.
A break above the $22.60 level should kick off more buying, but I think that the week of Christmas is going to be very quiet and choppy, and it is a bit difficult to imagine a scenario where people are comfortable putting huge bets on in the market when it comes to a commodity that is volatile under the best circumstances like silver is. On the other hand, we could pull back a bit and that is most certainly what the candlestick from Friday does suggest, meaning that we could drop towards the $22 level again. That is an area of significant support on longer-term charts, extending down to the $21.50 level which we tested just Wednesday.
Going back to the positive case, if we were to take out the $22.60 level to the upside, we could go looking towards the 50 day EMA which is currently sitting at the $23.27 level, followed by a move towards the $24 level which has been important a couple of times in the past. The market has seen a lot of support just below on longer time frames, so I suspect that any pullback at this point in time will probably attract a certain amount of buying pressure. That being said, if we were to somehow break down below that $21.50 region, then it opens up a trapdoor to much lower pricing, perhaps sending silver down to the $20 level.
Pay attention to the US Dollar Index, as there is a strong negative correlation between that index and this commodity. Furthermore, a lot of the omicron headlines will move this market around as silver is most decidedly an industrial metal, and the demand will come into the picture when it comes to whether or not pricing cannot be sustained.
