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Pulls Back, is it Time to Find Value?


When dealing with silver, it is crucial to exercise caution and be mindful of position sizing due to its inherent volatility. 

  • During Wednesday’s trading session, the silver market experienced a slight decline, characterized by ongoing noise and volatility.
  • However, there are several key factors to consider that may indicate an imminent squeeze in the market. Currently, silver is hovering around the 50% Fibonacci retracement level, positioned between the 50-Day Exponential Moving Average and the 200-Day EMA indicators.
  • This particular trading range often signals an impending significant movement, suggesting that exercising patience may benefit traders navigating the silver market.

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Regarding a potential downward scenario, a break below the 200-Day EMA could trigger further declines, potentially leading silver toward the 61.8% Fibonacci level, which is expected to be around the $22 mark. If this level is breached, it would create a path for a more substantial downward move, with the $20 level becoming a viable target. Such a decline may coincide with a strengthening US dollar, adding further pressure on silver prices.

On the upside, traders should take note of the slight resistance posed by the 50-Day EMA just above the $24 level. If silver manages to surpass this hurdle, it is likely to set its sights on the psychologically significant $25 level, which tends to attract significant attention from market participants. Considering all these factors, it is inevitable that traders will soon assess whether the pullback has provided an opportunity for value hunting. A substantial market bounce is likely to be the case, potentially propelling silver toward its previous highs.

When dealing with silver, it is crucial to exercise caution and be mindful of position sizing due to its inherent volatility. The dual nature of silver, acting as both a precious and industrial metal, adds complexity to its dynamics. Consequently, trading silver in the current market environment is more complex than trading gold. However, silver still retains its place and significance in the market. Diligence is key, and taking the time to enter positions thoughtfully is crucial. Once the constraints established by the moving averages are broken, significant and potentially lucrative price movements can be anticipated.

TLDR; silver continues to navigate through volatility, presenting both challenges and opportunities to traders. Wednesday’s minor setback should be viewed in perspective, considering that silver remains within the range defined by the 50% Fibonacci retracement level, the 50-Day EMA, and the 200-Day EMA. Exercising patience is advised as a significant market move appears to be on the horizon. Traders should exercise caution in position sizing, considering the noise and complexity surrounding silver’s role as both a precious and industrial metal.

Potential signal: Silver should continue to see a lot of volatility, but at the end of the day, I am going to be looking to buy. The $23.20 area is where I am going to scale into a position. The stop loss will be at the $22.80 level, and I am going to aim for the $24 level.


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