Silver markets have had a big day on Thursday to reach towards the $22.50 level. This is an area that will more than likely offer a significant amount of resistance, as it had been a bit of the ceiling as of late. Nonetheless, the move during the day on Thursday is somewhat impressive, so we certainly need to keep that in the back of our mind, and therefore recognize that we could be trying to break out.
For myself, I believe that a move above $22.60 would be an impressive break out that it simply could not be ignored. At that point in time, I would probably become very bullish silver, because we not only will we have turned everything around, but we would have broken through a significant barrier. At that point, I would anticipate that the market would go looking towards the 50 day EMA rather quickly. The 50 day EMA currently sits at the $23.28 level but is racing lower. The 50 day EMA would be merely a psychological barrier, not necessarily something that would be worth being concerned about.
Silver markets of course are very sensitive to the US dollar, which got hit rather hard during the trading session initially on Thursday but has turned around just a bit to show signs of life again. Silver is also highly dependent on the industrial demand, but at the very least one can say that we bounce from a technically important figure. After all, the low that we made during the trading session on Wednesday was almost to the penny the same as the low we made it a while ago in late September. That being said, I am not sure whether or not this is a short-term bounce or some type of significant rally that I can hang my hat on, so that is why you need to see it break above $22.60 to get more aggressive. In the short term, it would not be surprising at all to see this market bounce around sideways, perhaps trying to figure out a direction before it is all said and done. Keep an eye on the US dollar, and perhaps even more importantly the US Dollar Index, because it can give you an inverse signal as to which direction, we are going next year in silver.
