Summary:
I’m seeing Silver rally from the $47 level, but volume is fading as we approach $49 and $50. While the chart looks bullish short-term, I suspect we may have topped, so I’m watching risk closely.
From TheTraderGuy.com, this is Chris, taking a look at Silver. On October 30th, Silver has rallied quite nicely during the early part of the session, using the $47 level as a bit of a springboard. Over the last couple of days, we had reached toward the crucial 50-day EMA, only to turn around and show signs of hesitation before then taking off to the upside.
The last three days have gotten a bit bullish, and of course my email box and the various places where you’ll find me online are full of people asking if Silver is going to start taking off again. The answer, of course, is you never really know, but it does look like we are trying to make a statement. However, one thing I would point out is that as we turn things around, volume is dipping, and that has me wondering whether or not we can get to the $50 level.
$50 Matters Here.
A break above $50 on a daily close would be bullish for me, and I think at that point I might be a bit more comfortable. Best-case scenario, we could get some sideways action for a while, which would be healthy after the move we’ve seen. But really, at this point, I’m kind of suspecting that Silver may have seen the top. We’ll just have to wait and see how this plays out. This could be that classic pattern where you get a huge run higher, a little bit of a pullback, a bit of hope, and then a plunge.
Only time will tell, but it’s starting to look like that is a very real possibility. Dropping down to the 30-minute chart, you can see that we are approaching an area in the form of $49 that has caused some headaches. Again, I think to get to $50, we really would have to pick up quite a bit of momentum. It would not surprise me at all to see this market roll over again. The question is, will the $47 level hold? If it doesn’t, then I think that’s probably the first sign that we’re going to really challenge the $45.50 level, which could open up a move to the downside.
If we do break above $50, then keep an eye on $51.75, which opens up a move to the recent all-time highs. We’ll just have to wait and see. For what it’s worth, the backwardation is pretty much gone at this point, so spot is falling right in line with the futures. That’s another reason why I look at this and think that might have been distribution with all of this volume. Regardless, Silver is very dangerous and can cause absolute havoc in your trading account, so make sure to keep your position size reasonable.