Silver markets fluctuated on Wednesday as we continue to see plenty of noisy trading just below the 200-day EMA. Because of this, I think it is likely that we continue to see noisy behavior due to the fact that we are currently stuck between the 50-day EMA and the 200-day EMA indicators. The $25 level above is a major resistance barrier that if we were to break above it, the market would start to enter a longer-term “buy-and-hold” type of scenario.
Keep in mind that silver is highly volatile, even more so than most other commodities. Because of this, any position that you find yourself in at this point in time needs to be small, because you could get ripped around in both directions. If we can break above the $25 level, then you can be a bit more aggressive, because it would be a complete reversal of what has been going on in this market. To the downside, if we were to break down below the $23 level, it is very likely that silver will start to break down again. Keep in mind that the US dollar has a major negative correlation to what goes on here, so you are better off paying attention to the US Dollar Index as well, because it could give you a bit of a “heads up” as to where we might be going.
The only thing I think you can count on at this point is going to be massive amounts of noise, so please keep that in mind. The 200-day EMA obviously is a very important daily indicator, so a lot of traders will be paying attention to this. In that general vicinity I would expect this market to continue showing hesitation. Nonetheless, it certainly looks as if we are going to try to at least make a significant attempt at breaking out. It is worth noting that the shooting star from last week is something worth paying attention to as well. At this juncture, I believe that this market is about to make an explosive move, and our job is to simply sit by and wait for it to confirm that move.
