Potential signal:
- I’m a silver buyer right here.
- I do have a stop loss at $37.30, with a target of $39.50.
The silver market initially did fall a bit during the trading session on Thursday, after initially gapping just a touch higher. By following the way it did, we tested a significant area of importance as far as I can tell on this chart. The $37.50 region is an area that previously had been very difficult resistance to overcome, so “market memory” dictates that it should end up being support on any pullback to it. During the day, we reach pretty close to that level and then bounced nicely. With that in mind, I think we have a simple “breakout, pullback, and retest situation” here.
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Massive Uptrend
Silver has been in a massive uptrend for a while, and I just don’t see why that would change in a flash. Yes, we got a nice pullback at this point in time to test a major support level, but I think this just solidifies the idea that silver should continue to go higher over the longer term. Quite frankly, I think we’ve got a situation where silver will continue to see more demand, not only from a precious metal standpoint, but also from an industrial standpoint as the economies around the world continue to strengthen. This will be especially true if the Americans continue to strengthen, which of course they have.
Because of this, I like the idea of buying silver in this general vicinity. We have a clearer area of support that needs to be held, which of course is in the neighborhood of $37, giving that support level of $37.50 plenty of “cushion” to prove itself. On a move higher, I would look at this market as likely to test the recent highs, and then eventually the $40 level as it is the “measured move” of the previous consolidation phase that we broke out of last week.
I have no interest in shorting silver, I believe that it will continue to see a lot of inflows, especially as the market is highly sensitive to momentum in general, and of course recently we have seen quite a bit of that come into the market, followed by a little bit of grinding sideways, followed by yet another shot higher.
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