- The silver market has been relatively calm in recent trading sessions, hovering around the 200-day Exponential Moving Average (EMA).
- However, the market has just formed a potential "V pattern," which is a signal that many traders consider an opportunity to start buying again.
- If the market can break above the $22 level, it would not only clear the 200-day EMA indicator but also surpass a psychologically significant threshold that many investors will take note of.
Potential Bullish Trend
If the market manages to break through the $22 level, it could gain momentum and move toward the 50-day EMA at $22.67. From there, the $23 level becomes a possible target. While it is possible for silver to reach that level, traders should expect to encounter choppy trading behavior along the way. Silver is a highly volatile commodity, and maintaining a modest trading position is advisable.
Although the potential for a bullish trend is present, traders should also consider the possibility of a bearish scenario. If the market breaks down below the hammer from the Monday session and touches the 50% Fibonacci level, it could drop down to the 61.8% Fibonacci level or even the significant $20 level. The $20 level was a significant barrier not long ago, and it may attract substantial attention again.
It is not yet clear whether the recent pullback is a sign of silver's struggle or just a temporary setback in a bullish long-term trend. Nevertheless, traders should remain cautious and consider the volatility of silver when making their trading decisions.
In summary, the silver market is currently in a holding pattern and is likely to experience choppy trading behavior if it breaks above the $22 level. However, if it breaks down below the hammer from the Monday session, it could drop down to the $20 level. Traders should be mindful of silver's volatility and maintain modest trading positions. While the potential for a bullish trend exists, it is advisable to remain cautious and monitor market developments closely. Position sizing will by far be the best protection that you have, and that’s especially true in silver as it tends to be one of the more volatile markets that we trade. Keep in mind that the US dollar can have a bit of a negative correlation to silver regardless, so pay attention to the US Dollar Index at the same time.
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