Silver has experienced a wild ride during Wednesday's trading session, shooting higher but also giving up a significant portion of its gains. With continued volatility, it's important for traders to either stay out of the market or maintain a reasonable position size to protect themselves.
If silver manages to break above the $22.55 level, it could open the door for a move to the $23.50 level. Currently, silver is trading around the 200-Day EMA and the 50-Day EMA, having recently bounced from the 61.8% Fibonacci level. Short-term pullbacks might present attractive buying opportunities, considering the strong upward movement we've seen.
However, the current market environment is challenging to navigate, with the bond market essentially in disarray. This situation makes silver a more difficult asset to trade compared to gold, its less volatile cousin. Nonetheless, the recent bounce suggests that there are plenty of buyers eager to protect their wealth.
Watch for Crucial Price Levels
- If silver takes a downward turn and breaks below the $21 level, it could head back down to the $20 level, a psychologically significant threshold.
- To successfully trade silver, it's essential to approach it cautiously and build a position as the trade moves in your favor.
- Although choppy, silver tends to move steadily in a general direction over the long term, making it a potentially rewarding asset if you can capitalize on that trend.
On the other hand, if your position is too large, it doesn't take much to get spooked and exit the market prematurely. The key is to remain patient and manage your position size carefully. I cannot reiterate enough just how dangerous trading silver can be, especially if you are doing so in the futures markets. If you have the ability to trade silver via CFD, you can cut down your position small enough to make it so that you can get exposure to the market, without getting blown out by the market on a sudden move.
At the end of the day, silver has seen significant volatility during Wednesday's trading session, and traders must stay vigilant to protect themselves in such an environment. Watch for crucial price levels, such as $22.55, $23.50, and $21, and be prepared to adjust your strategy as needed. Remember that silver's movement can be less predictable than gold due to external factors like the bond market, but with patience and strategic positioning, you can take advantage of its long-term trends.
