- In my daily analysis of the commodity markets, the silver market has caught my attention as we continue to meander just below the crucial $30 level.
- The $30 level is obviously a large, round, psychologically significant figure, and an area where we have seen a lot of action previously.
- Because of this, I think you have to look at this through the prism of a market that is doing everything it can to break to the upside, but doesn’t have much of a reason to other than potential momentum.
Technical Analysis and Fundamental Problems
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The technical analysis for the silver market is fairly dire, but the one thing that is still operating in its favor is the fact that it seems like the buyers are willing to come in and pick up silver near the 200 Day EMA. This is the bare minimum you need to see for a strong uptrend, and therefore I think it is worth noting that it happened. However, it’s also worth noting that the $30 level has been both support and resistance multiple times, and most recently has certainly been significant resistance. If we can break above there, and recapture the previous uptrend line, that would of course be a strong sign. I estimate that would be somewhere near the $30.60 level.
On the downside, if we were to break down below the $28.75 level, I suspect at that point we would see a gradual decline of silver as it will have broken through far too many support levels to get aggressive with to the upside. There are plenty of things that could cause us to happen. For example, the Federal Reserve is cut interest rates by 100 basis points, but at the same time the 10 year yield in America has risen by 100 basis points. Higher interest rates are toxic for industrial metals, and that of course is a major component of what drives silver, it’s industrial use. It’s not just the precious metal, and that’s something that a lot of retail traders would do well to keep in mind.
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