- Silver plunged toward a long-term uptrend line on Friday, testing key technical support as fading volume and volatility dominate.
- The $47 level remains the crucial breakdown point, while upside potential hinges on reclaiming $50 and higher resistance levels.
Silver has plunged during the Friday session to test a major uptrend line that extends back to the latter part of August. It is also worth noting that the 50-day EMA is sitting around the same area. A breakdown below that zone opens the possibility of a move down to the $47 level.
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Critical Support and Double-Top Risk
The $47 level is a large, psychologically significant figure, but more importantly, it is an area where a lot of support has appeared previously. If price breaks down below there, it opens the possibility of a major breakdown. There is also the possibility of a double top forming in this market, although it has not been confirmed—not until the $47 level gives way. Volume is much lighter than it was during the initial push higher.
While there is no interest in shorting this market, buying it is not necessarily easy either. Close attention needs to be paid to what happens near the $50 level. A break above $50 opens the possibility of the $51.50 level, and if price can get above there, then $54 could be targeted.
There is likely to be a lot of choppy behavior in the silver market because the market is choppy under the best of circumstances, and now it has even more attention. This type of volatility almost always ends poorly, so caution is essential. There is some optimism, but it must be emphasized that this market can be extremely dangerous when it starts behaving like this, as the next move could be massive and sudden.
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