- During my daily analysis of the commodity market, the chart that really stands out, perhaps with the exception of the natural gas market, is the silver market.
- This is because silver, for lack of a better phrase, “looks like death.”
- Ultimately, silver is very sensitive to interest rates, as well as a whole plethora of other things, so there are a lot of things out there worth paying close attention to.
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Technical Analysis
The technical analysis for this market looks horrible. We are currently in a consolidation area and looking very likely to break down from this point. The 200 Day EMA is flat, but it’s also right in the middle of this consolidation area, so we need to pay close attention to it. Furthermore, we broke down below a major uptrend line, and of course the crucial $30 level. Ultimately, if we break down below the low from a couple of weeks ago, then we have a “trendline break, drop, balance and retest of the trendline, and a fresh low.” This in its very essence signifies that we have changed trends.
If we were to break down below that low, then it could very well open up a big move down to the $26 level. Furthermore, if you squint a little bit, you can make an argument for a “head and shoulders pattern” that had a neckline just below the $30 level. I did not short that though, because of the trendline more than anything else. Furthermore, it’s the time of year where you don’t want to get aggressive and what is typically an aggressive market to begin with. Volume certainly will make a difference at this point in time, but I think if we cannot hang on to this consolidation area, it will be absolutely horrible for silver.
Ultimately, it is an industrial metal as well is a precious metal, so you need to be very cautious about getting aggressive in silver anyway. While several central banks around the world are loosening monetary policy, the fact is the bond market in America doesn’t seem to be willing to play that same game, and therefore it’s very difficult for traders to bet on massive expansion in the industrial sector.
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