- During my daily analysis of commodity markets, the chart that really stands out, perhaps with the exception of natural gas, is the silver market.
- That’s because silver, for lack of a better phrase, “looks like death.”
- Finally, silver is very sensitive to interest rates, as well as a whole host of other things, so there are many things worth paying close attention to.
Technical Analysis
The technical analysis for this market looks terrible. We are currently in a consolidation area and there is a high probability that we will break from this point. The 200-day EMA is flat, but it’s also right in the middle of this consolidation area, so we should pay close attention to it. Moreover, we broke below the main uptrend line, and of course the crucial $30 level. Finally, if we break below the low of a few weeks ago, then we have a “break of the trend line, decline, balance and retest of the trend line, and a new low”. This essentially means that we have changed the trends.
If we were to break below that low, then it could very well open up a big move to the $26 level. Plus, if you squint a little, you can make a case for a “head and shoulders pattern” that had a cutout just below the $30 level. I didn’t short it though, because of the trend line more than anything else. Moreover, it is the time of year when you don’t want to get aggressive and what is typically an aggressive market to begin with. Volume will certainly make a difference at this point, but I think if we can’t hold this area of consolidation, it will be absolutely terrible for silver.
After all, it’s an industrial metal that’s also a precious metal, so you have to be very careful about getting aggressive in silver anyway. While several central banks around the world are easing monetary policy, the fact is that the US bond market does not seem ready to play the same game, making it very difficult for traders to bet on a massive expansion in the industrial sector.
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