Silver markets have pulled back a bit during the course of the week, but as you can see have turned around to form a bit of a hammer. The hammer sits right on top of the bottom of the overall uptrend line of the ascending triangle, so therefore I think it is only a matter of time before we rally. If the market can break above the top of the weekly candlestick, then it is likely that we break out to the upside, perhaps going towards the $28 level. On the other hand, if we break down below the candlestick, then it is likely that the market could break towards the $24 level, maybe even the $20 level on some type of selloff.
SILVER Video 02.08.21
Keep in mind that silver has a huge correlation to the industrial demand, but with Jerome Powell and the Federal Reserve suggesting that they are nowhere near tightening monetary policy, that could weaken the US dollar just enough to make the silver market go higher. Gold has really taken off, and perhaps will continue to drag silver along with it. Nonetheless, this is a market that is very difficult to risk manage, mainly because the cost involved per text.
Because of this, I would be very cautious about the position size, and only add to the position as the trade works out. Either way, it looks like we are probably going to get a significant move relatively soon. That being said, the market is likely to continue to see noisy behavior, but eventually I fully anticipate seeing some type of impulsive candlestick that we can follow right along with.
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This article was originally posted on FX Empire
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