Silver Forecast: Continues to Test the Top of Consolidation

• Silver has been rather back and forth during the session on Monday, as we continue to hang around the top of consolidation.
• Recently, we have seen a lot of money fly into the silver markets, and as a result it should not be a huge surprise to see that we have had to work off some of the excess froth near the $24.33 level.
• Whether or not we hold that as resistance is a completely different question, but right now it does look like it is somewhat important.

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If we pull back from here, we could go searching to the $23.23 level, perhaps even down to the $23 level. This looks like a range-bound market, and I think it could stay that way for a while, but I also recognize that sooner or later we’re going to have to break out of this range. Because of this, it’s probably worth noting that the markets remain very noisy, and therefore we could have sudden moves. This will be especially true with the silver, as it is volatile under the best of circumstances. I believe ultimately, we have a situation where silver will probably follow gold, and gold is a little overstretched at the moment. It is because of this that I don’t think that we break out to the upside, but then again anything is possible.

Market Likely to Continue Being Very Noisy

If we do take out the $24.50 level, then we will almost certainly start challenging $25 above. The $25 level is a large, round, psychologically significant level that a lot of people will be paying attention to, so I think it could be difficult to take out. That being said, I cannot guarantee anything, but right now I suspect we get more back and forth as we try to figure out whether or not we have enough momentum to push this market to the upside.

 The 50-Day EMA is near the $23 level and could offer significant support. Ultimately, I think this is a scenario where we will continue to see a lot of noisy behavior, but you will have to keep an eye on the US dollar. After all, it has a huge negative correlation to silver most times, although that is starting to break down a bit. The market will continue to be very noisy, that’s the only thing I can guarantee you.

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