- Silver has rallied a bit during the trading session on Wednesday as we continue to see a lot of momentum in this market.
- That being said, this is a market that I think is trying to find some type of range in order to settle things down, with the $50 perhaps offering a little bit of a magnet for price, as it is a large, round, psychologically significant figure, and an area that the market has been eyeballing for some time.
- The question is at this point as to whether or not we can hang out in this area, and I am looking at this as a market that is sooner or later going to see something bad happen.
This is because silver has a long history of seeing a lot of bullish pressure only to turn around and fall apart. After all, there are a lot of entities out there that are very interested in the idea of silver remaining somewhat soft, as a lot of big entities have been short for quite some time. Ultimately, this is a market that remains bullish and it’s almost impossible to short anytime soon, but I do think you’ve got a situation where the traders are going to have to look at this through a “buy on the dips” scenario.
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Going Forward
I think at this point in time you have to remind yourself that going forward, we are reaching a very dangerous point in time. After all, the silver market has been very bullish for a while, but the candlestick on the Tuesday session shows just how difficult this next leg of the uptrend could end up being. There were massive amounts of contracts being traded, and volume increasing suggest that there are a lot of concerns out there based on that candlestick from Tuesday being so “neutral.” I think at this point in time we are sooner or later going to see some type of vicious pullback, but that’s normal for silver. As long as we can stay above the $48 level, then I think we are probably somewhat “okay.”
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