Silver markets fell on Wednesday as the 50 day EMA has offered a significant amount of resistance. At this point in time, the market looks as if it could continue to drop significantly, although one of the things that you need to keep in the back of your mind is that there is a serious lack of liquidity out there, so you need to be cautious about your position size. The market could very well go all the way to the $22 level rather rapidly, but then again it is hard to tell what the next couple of days will bring us, simply because silver looks miserable and none of the big players are going to be out there trying to put money to work between now and New Year’s Day.
I suspect the next couple of days are going to be choppy and noisy, but I do favor the downside more than anything else. The 50 day EMA holding as resistance makes quite a bit of sense, especially as we ended up forming a shooting star on Tuesday. Now that we have broken down from there, the momentum should be heading towards the downside more than anything else. This is a market that I think will continue to be very noisy, but I do not have any interest in trying to put a bunch of money to work. In fact, I think you probably need to wait until you get some type of clarity after New Year’s before you put any money to work. The US dollar will have its negative correlation with this market, so pay attention to the US Dollar Index.
The next couple of days will probably be a complete waste your time, so whatever you do, I would simply wait for a couple of days and some type of impulsive move that we can follow at that point in time. Silver is very dangerous under the best circumstances, so I do not see how this week is going to be a week that you want to be putting money to work in this type of environment. Currently, I think the absolute “floor the market” is at the $21.55 level below.
