Silver continues to see a lot of noisy behavior as the market initially tried to recover on Monday after plunging right at the open. That being said, we have seen the sellers come back into the silver market and it now is simply hanging around the 50-day EMA.
Silver Futures
The 50-day EMA sits just below the $80 level, and this suggests to me that we have a lot of questions out there as to whether or not the silver market can continue the behavior that it has seen. The horrific candlestick from Friday is clearly something that will scar the market for quite some time, as we had at one point almost hit $120 and closing just below $80.
That is the type of event that the market does not forget overnight. Even if the silver market does decide to continue going to the upside over the longer term, the reality is that market participants will be very hesitant to become aggressive. Furthermore, you have a big problem with margin being increased, and that of course has a major dampening influence on price as well.
During the session on Monday, we tested just above the $70 level. If we were to break down below the $70 level, I think the floodgates open up. Quite frankly, silver is not a market you should be messing around right now because the worst thing that could happen right now is that silver were to turn around and wipe out that candlestick from Friday easily.
Market Sentiment and Outlook
That would be horrific. Ultimately, I think we are in an area that is very dangerous and you are better served to let the market tell you what it is going to do next. In the short term, the more time we spend going sideways, the better off we are going to be.
But with that being the case, this is a market that is probably very closely monitored and a market that I think has a lot to take into account. The next couple of days will probably be more about licking wounds than anything else.
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