- The silver market initially rallied during the trading session on Thursday but found itself struggling as soon as we got to the $50 level.
- This is worth watching, because the $50 level has a long history of being an absolute ceiling in this market.
- The markets continue to see a lot of volatility at this point, and I do think that it will be very difficult for the $50 level to be broken.
- If we do break above that level, then it’s likely that we should see even more “FOMO trading”, but at this point in time I think silver has gotten a little bit ahead of itself.
Trend
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The trend is still very much to the upside, but we also have to keep in mind that the market is a bit overdone, so this reaction isn’t overly surprising. There is a massive barrier near the $50 level, and it’s possible that the market may try to find a short-term ceiling. I’m not really worried about shorting the silver market yet, because at the $50 level does what it had done a couple of times between now and the late 1970s, silver could drop down to the single digit level. I don’t think that happens, but it is something that you have to keep in mind.
For what it is worth, the volume picked up rather drastically during the trading session, so this tells me just how many traders were willing to get involved. As I saw traders all over Twitter celebrate the idea of silver “going to the moon”, just a few hours later we had seen silver drop over 3% from where it had opened the session. This is a horrible candlestick for the session, and it’s difficult to imagine that the market will pull back a little further from here. This not to say that it has to, and it’s not even to say that you should short the silver market, but I think there is a message in this session, and now the question will be is there going to be any follow-through?
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