Silver markets have been rather bullish as of late, with perhaps the exception of the previous week. However, this makes quite a bit of sense as we had gotten far ahead of ourselves, and of course the psychologically important $16 level above will attract a certain amount of attention. With that in mind, I do think that silver has made its bullish case, but perhaps the prudent trader will be on the sidelines waiting for some type of value.
The Friday candlestick was less than enthusiastic and taken by itself it could be a rather negative sign. As for myself, I think that we most certainly have opportunities below to pick up value. I do not wish to short the market, because of the recent explosion that we have seen. We had been consolidating between $14 on the bottom, and $15 on the top for several months. The measured move was for $1.00, which of course coincided with $16. However, most of the breakout was predicated upon a major shift in sentiment coming out of the Federal Reserve.
With Jerome Powell suddenly backtracking on what the market perceived as a “automatically hawkish bias”, we now have a bit of weakness in the US dollar. This of course is good for precious metals, and silver of course won’t act any differently. The Gold markets have been very strong and have been pressing the psychologically important $1300 level simultaneously. I believe that both of these markets are due for a corrective pullback but I will emphasize one word here: “corrective.”
At the 20 day EMA underneath, I anticipate that we will see a bit of technical support. We recently crossed the 20 day EMA above the 50 day EMA, which of course is a bullish sign. Beyond that, you could even market the idea of a bullish flag here. If the bullish flag does in fact break to the upside, that has the market looking for roughly $17, which had previously been very important as resistance. All things being equal, it looks as if the stars are aligning for Silver markets to continue to the upside.