Silver has been all over the place on Thursday, as the markets are trying to react to the strengthening of the US dollar in general.
Silver
Silver has been all over the place during the trading session on Tuesday as we have seen a lot of really negative momentum after initially trying to recover from the previous sell-off. All things being equal, this is a market that I think will continue to see a lot of dangerous volatility and that dangerous volatility is something that unfortunately, I think a lot of traders may not be paying attention to. In an environment like this, regardless of which direction you plan on trading, you have to understand that a smaller position is probably the best way to deal with this type of action.
Silver Selling Off on Dollar Strength
Silver selling off the way it has suggests just how negative the environment could end up being with the US dollar strengthening. We did test the $80 level, so far it seems as if it is trying to hold and the $80 level is a large round psychological number that I think will continue to attract a bit of attention, especially as the 50-day EMA sits there. If we were to break down below the lows of the candlesticks for the session here on Tuesday, I think that opens up $70 as a potential target. Anything below there, things get really ugly, really quick.
I do think that with a strengthening US dollar, silver is going to continue to be very soft to say the least and probably the purview of short-term trading. $90 remains a bit of a ceiling, but if we could break back above there, that would be a very positive sign. Ultimately, silver does not behave the same way as gold, so you will not necessarily get a war premium either. You will more or less get a US dollar reaction, I think.