- Silver has gotten absolutely hammered later in the day on Friday after initially spiking.
- I think what we have here is the potential for a turnaround.
- I wouldn't short the market, but I do recognize that a lot of people took a lot of profit during the session.
The $30 level above is a huge barrier that goes back decades, not just years. It has been broken once or twice, but the resistance even goes back to the 70’s. So, with that being the case, I think you've got a situation where market participants are probably a little skittish to hang on to this position, especially those who have been in the market for two or $3 already. Why not make a profit and make a huge gain if you are already that far ahead?
Turning Around?
That being said, if we were to turn around and break down below the $28.50 level with any type of momentum, we could see a complete collapse in the silver market, which it is known for doing. The market is highly manipulated most of the time in the paper silver market, so it's something that you need to be very cautious with. In fact, JP Morgan's been fined multiple times for multiple millions of dollars for doing this exact thing. So that being said, this is a market that I think you have to be very cautious with at this point and you have to recognize the importance of both the $30 level and the $28.50 level. Furthermore, keep your position size reasonable because there are a few markets that can punish you like silver if you get things wrong as it is such a volatile and massive contract to trade.
If you do choose to get involved, the most important thing you can do is to make sure your stop losses are wide, and therefore you have to look at it through the prism of a smaller than usual position size and recognize that this isn’t the place to “YOLO trade.”
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