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Silver Forecast: Showing Signs of Exhaustion

If we break down below the candlesticks of the last couple of days, I’m going to try to short this down to $21.

  • Silver price has rallied a bit during the trading session on Friday, but has given back the gains to show signs of exhaustion.
  • The 200-Day EMA sits just below, and a lot of people will take a serious look at that as a major Forex indicator and a trend defining signal.
  • As long as we can stay above there, there will be a certain amount of hope for the silver market.

Gold and Silver Markets Correlation

However, if we were to break down below there, it is very likely that we could go down to the $21 level, which is an area where we had seen a lot of support previously. If we were to turn around and take out the top of the candlestick from Thursday, then I think it’s very likely that we could go looking to the top of the major breakdown candlestick, which ends at roughly $23.50. The candlestick before that was a shooting star as well, so all things being equal, is very likely that we will continue to see a lot of noise and with this I think it’s only a matter of time before we have to make a bigger move. At this point, I would have to say that silver looks very threatened, but we have not had the actual breakdown to make that happen.

For what it is worth, the gold market initially tried to rally several days in a row this week, but gave up gains. It is more likely than not we will see silver drag gold right down with it or vice versa. After all, they do tend to move in synchronicity, so one might leave the other, and therefore you can use that as a signal to get short or long.

Silver is an industrial metal, so there is a certain amount of economic influence as well. After all, the demand for silver from an industrial standpoint is going to have a major influence on price, but we also have the US dollar with its negative correlation. Beyond that, we have interest rates, which of course have been a lot hotter than they have for the last 15 years. I expect to see a lot of volatility, so the simplest route is to follow price. If we break down below the candlesticks of the last couple of days, I’m going to try to short this down to $21. If we break above them, then I think $24.50 might be my target.

Silver Chart

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