The silver market has exploded higher on Tuesday, as traders continue to pay close attention to the interest rates in the USA overall. This is an inverse correlation between these markets that are well known.
Silver
The silver market has exploded to the upside during the trading session on Tuesday as interest rates have finally come decisively away from the 4.30 level. With this being the case, I think you've got a situation where traders are looking at this as a scenario where we continue to see an inverse correlation.
The 4.30 level is an area that I think will be interesting for traders to pay attention to and now that we are pulling back from there, that inverse correlation stops working against the price of silver. But the $80 level above is a large round psychologically significant figure and an area that has been both support and resistance.
The Potential for a $90 Target
So, if we were to break above there, then we could go looking to a move to the $90 level. A short-term pullback I think offers a little bit of value and those pullbacks offer the opportunity of an opportunity to take advantage of cheap silver. And I do think if the interest rates in the 10-year continue to fall, silver probably goes looking to the $90 level.
I do like silver, but I like buying short-term pullbacks to take advantage of the I believe longer-term uptrend and possible bottoming pattern. Remember there is still a shortage of silver out there and therefore I think we will go higher over the longer term. If the 10-year yield continues to drop and we can clear the $80 level, I believe that it allows silver to go looking to 90 and that is the trade.
Potential signal: Silver above $80 on an hourly close, with falling 10-year rates is a buy signal. The stop loss is $78 level, with a target of $86.