Potential signal
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I am buying silver above the 50 day EMA, roughly $78.18, with a stop loss of $77.90 and a target of $79.75.
Silver markets gapped lower, only to turn around and show signs of strength during the trading session on Wednesday as we have seen interest rates in the United States drop. That of course does help silver as silver is highly sensitive to risk appetite and of course interest rates, which as usual are tied together.
It’s worth noting that the 50-day EMA is sitting at the $78.18 level just above, offering a bit of a barrier. All things being equal, markets will continue to look for some type of opportunity to buy dips going forward, but I also recognize that traders will look at this as a market that will remain very choppy and very volatile as it’s not only sensitive to the interest rate situation, but it’s also just risk appetite driven, which unfortunately is being driven by the noise coming out of the Middle East at the moment.
The overall attitude of the markets will change from day to day and quite frankly from social media post to social media post. I look at the $70 level right now as a floor in this market and I think as long as we can stay above there, we stay in the same overall range that we have been in. To the upside, if we were to break above the $80 level, we could go looking to the $90 level before it’s all said and done.
A Lot of Volatility and Choppiness
I do think this is a situation where traders will continue to see a lot of volatility and choppiness, so the correct position sizing will be crucial obviously. And I think you have to recognize that in this environment it’s very likely that the overhang of resistance will continue to be something to pay close attention to.
Nonetheless, I think you have an opportunity here every time it does drop mainly because of the overall volatility. Longer term traders certainly are probably going to have more headaches than not with this noise, but I also recognize that the overall range still holds despite the fact that we have all of this noise, and as a result that’s basically how I’m looking at this market.
I think we probably bounce a bit from here. It doesn’t necessarily mean that things go crazy, but I think staying in this form of stasis during this war and all of the supply chain issues that go with it makes a lot of sense. Longer term, there is a serious lack of supply when it comes to silver and that should eventually have silver racing higher like it once was.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
