I am buying with an eye on $25, but I also recognize that once I get there I probably need to start thinking about collecting profit again.
Silver markets have had a couple of good sessions, as we are now hanging about the $22.94 level. The silver markets are threatening a move above the $23 level, which would be a major victory considering just how sold off this market was just a couple of weeks ago. By rallying the way we have, this tells me that the silver market still has a lot of demand built into it, which is quite telling considering that it is thought of as an industrial metal more than anything else.
Pay attention to the US dollar as well though, because there is a negative correlation between the two assets. If the US dollar suddenly spikes higher, then it is very difficult for silver to do the same as the negative correlation is so well known. This is a market that has bounced from the $21.50 level a couple of times now, forming a massive “double bottom.” That suggests to me that the market will not sell off below there. If that is going to be the case, then you have to play the range that the market gives you, meaning that $21.50 is the absolute bottom and the absolute top right now is probably closer to $25. This has been a significant recovery over the last couple of weeks, and I do not see that changing anytime soon from what I can tell. The recovery has been rather impressive, and it is worth noting that we had taken out a couple of resistance barriers previously, so momentum is now on the side of the silver buyer.
The 50 day EMA currently sits at the $23.16 level, so that could be a little bit of technical resistance, but I would not worry too much about it. The market has long-term memories and the areas that are so clearly defined on this chart will be revisited multiple times. It is because of this that I am buying with an eye on $25, but I also recognize that once I get there I probably need to start thinking about collecting profit again as this looks a lot like a range-bound market for me, with a large and sweeping consolidation range that if you are patient enough to play, could be quite profitable as the moves will be rather large.
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