- The silver market continues to defy gravity, and really, at this point in time, I think it is overbought at the very least.
- The market did break above the $70 level at one point in the futures market during the trading session on Tuesday, but it is giving back some of the gains.
- This makes sense because silver, like many other commodities in the futures markets, does tend to react to these big figures, and therefore, I think giving back a little bit as we pierce $70 makes quite a bit of sense and perhaps leads to a short-term pullback.
Market Dynamics and Holiday Liquidity
That being said, this is a market that I have no interest whatsoever in shorting, and I do think you have a scenario where it's almost impossible to think anything other than buying dips would be the way forward. This is a situation where the holidays are coming, and that will greatly influence the overall liquidity and volume, which could be a bit of a problem for silver.
Top Forex Brokers
Nonetheless, the overbought conditions, the lack of volume, everything else seems to be ignored at the moment as we continue to squeeze higher. This will break something sooner or later, and I do think that this situation in the silver market will be addressed before it's all said and done. As things stand right now, it's just simply running away, and what's interesting is I'm not seeing the effects, for example, in the forex market.
The stock market doesn't seem influenced by it either, nor does the bond market. Now, that's the thing. That tells you that silver isn't breaking anything yet, but sooner or later this type of move will and it will cause chaos everywhere. In that environment, you will see a nasty snapback. Again, I don't think we're there, but that is how this probably ends. In the meantime, anytime you can pick up cheap silver, meaning a pullback and a bounce, you will want to start buying the right-hand side of the V because so far it has pretty much paid off every time you've had the opportunity to do it.
The 50-day EMA is all the way down at the $55.81 level, so we are light years away from that, and quite frankly, we could drop down to that 50-day EMA and would still be in a massive uptrend. We are so overextended. As we head into the holidays, things might get a little bit squirrely from a volume and liquidity perspective, and of course, we'll have a couple of days where the markets are shut down over the next two weeks, but I have no interest in trying to fight this trend.
Ready to trade our daily forex analysis? Here are the best Silver trading platforms to choose from.