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Silver markets initially pulled back a bit during the course of the trading session on Wednesday but continues to find plenty of buyers underneath. The market forming a bit of a hammer for the third day in a row of course is a very bullish sign, or at the very least a sign of stability. The $23.50 level is an area that I think buyers will continue to defend, so it will be interesting to see how this plays out. With that being said, I think that it is only a matter of time before this market tries to reach to the upside.
SILVER Video 16.09.21
To the downside, if we break down below the $23.50 level, then it opens up the possibility of a move towards the $23 level. The $23 level is an area that is massive support, so breaking down below that level then opens up the possibility of a bigger move to the downside. The market breaking down below that level then opens up the possibility of a move to the $20 level. That of course would be in a strongly negative situation, but the fact that we continue to find buyers suggests that at the very least we are more than likely going to get a bit of a bounce.
That bounce could then leave the market towards the 50 day EMA, which is at the $24.50 region. The market will then find resistance in that region as we have seen previously as well. Furthermore, you have to pay close attention to the US Dollar Index, as the US dollar tends to have a negative correlation to the silver market. Because of this, expect a lot of noisy behavior.
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This article was originally posted on FX Empire