- Silver has rallied a bit in the early hours here on Monday as we have broken above the $47 level.
- The $47 level is just another large round psychologically significant figure.
- It's not necessarily something that has any real importance, but when you zoom out on the chart, you can see just how far we have come in the last basically five or six years, going back through longer term charts, every time we get close to the $50 level, silver has had serious problems.
Now, I don't know if we won't be able to break above $50, but what I do know is that we are a little extended at the moment, and a short term pullback would make a certain amount of sense. Pretty much at any large round psychologically significant figure, be it $46, $45, $44, I think you'll have people willing to get involved. At this point, the 50 day EMA is just under the $41 level. And I think the floor and the trend has moved up to the $40 level. Anything below the $40 level would be very negative. And I think at that point time, you have to wonder whether or not silver isn't going to collapse like it has a few times.
To the Upside…
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On the upside, I think if we continue to grind straight up in the air like we have been, it just gets harder and harder to get involved. Ultimately, this is the type of market where it has been so strong. If you are not already involved, there's probably not a lot to do. Looking for value is the way to go forward and consider this analysis more or less by way of trying to bring some caution to traders who might be chasing this. Don't get me wrong, I don't think it's time to start shorting this market either, but I do recognize that silver is a little overdone.
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