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Traders should keep an eye on the $24 level, as it could act as a significant magnet for price in the future.
The Silver market showed initial signs of strength during Tuesday’s trading session, but then came back to show more hesitation. This situation is a consolidation after a huge move higher, which is precisely what is expected to happen, unless there is some type of pullback to offer value. As the market went straight up in the air, there are two ways to work off an overbought condition. The first way is to grind sideways and work it off through time, or on some type of pullback to have more traders come back into the market.
- Underneath the market, the $24 level is where the market launched from and previously served as a significant magnet for price, as seen when looking back to the beginning of the year.
- Short-term traders are likely to come back to the market on short-term dips, but longer-term investors are probably thinking about wealth preservation.
- There are a lot of concerns around the world when it comes to global growth, which could ironically be part of what brings this market back down.
It is important to remember that silver is highly sensitive to industrial demand, which could work against it in the short term, but ultimately, the wealth preservation aspect seems to be a significant driving force. It is worth noting that just above the market, there is a lot of noise between here and the $26 level. This area has been very noisy historically, indicating that we are likely to continue experiencing a lot of trouble just above. Therefore, it is only a matter of time before we see some type of pushback. However, the $23.50 level underneath could provide support, and if we break down below that level, it is possible that we could go down to the 50-Day EMA.
Overall, the market is overextended, so it is not advisable to chase this market all the way up here. Although traders should not short this market right now, there is an indication of some hesitation in the market. Therefore, it is best to wait for the market to work off the overbought condition through time or a pullback to have more traders come back into the market. Traders should keep an eye on the $24 level, as it could act as a significant magnet for price in the future.
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