Potential signal:
- Silver almost certainly looks like the buyers are still in control. Because of this I am a buyer right here, right now, with a stop loss at $29.80.
- If we rally from here I anticipate taking profit near the $32 level.
- Silver fell initially during the trading session on Monday only to turn on the show signs of life again.
- It looks like the $30 level will continue to be a major support level, and the action on Monday has done nothing but confirm this yet again.
Given enough time, the market is likely to continue to see more of a buy on the dip holiday, and at this point in time the market is likely to see an attempt to get back to the top of the overall consolidation range that we have been in for a while. Because of this, I think you have a situation where traders will be looking at this through the prism of trying to find value, and it most certainly makes quite a bit of sense that we would see a bit of a rally as everybody freaks out about the PMI numbers.
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PMI Numbers Disappoint
The PMI numbers in the United States disappointed during the trading session, and it has everybody selling the US dollar and panicking all at once. This is more of the same nonsensical behavior that we have seen in the markets that will turn around at the first signs of the Federal Reserve possibly cutting rates. I suspect it is probably only a matter of time before people start banking on that again, and it should be a good thing for silver because the US dollar losing strength due to lower rates will almost certainly attract attention.
If we were to turn around a break down below the bottom of the candlestick for the trading session, that would obviously be a very negative turn of events, but even then, I think there is plenty of support near the $28.50 level that people will be paying close attention to. Furthermore, we also have the 50-Day EMA in that region, so I think at this point in time there would be plenty of value hunters willing to get into this market.
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