The silver markets tried to rally during the course of the session on Wednesday, but as you can see above the $19.20 level, we found far too much in the way of resistance. The resulting selling pressure ended up forming a shooting star for the daily candle, which of course is a negative sign. However, we have to wait to see what happens of the $19 level in my opinion, because it is an area that has been so important in the past. Yes, we did recently break through it, so in theory it should be easier to break down again. However, if it doesn’t get broken down easily, I think that shows that we are trying to form some type of bottom in this market.
If we get below the $19 level without too many issues, I think that we will ultimately break down to about $15. This is a market that has been beat down significantly, and as a result we may have to grind about this area for some time in order to break down and open the trapdoor so to speak. That trapdoor gets opened though, the move down could be rather drastic.
I’m still longer-term bullish though.
To be honest, I believe that silver will ultimately become very expensive. However, right now isn’t the time to be speculating on that type of thought process. I believe that longer-term traders will find this to be a market that can be bought into, but not yet. I am waiting on some type of nice supportive candle on a longer-term chart such as the weekly timeframe in order to start buying physical silver first, and then possibly options. The silver futures market is far too volatile inexpensive to be messing about trying to play some type of counter trend position.
All that being said, in the short term I certainly think that this market is ready to continue selling off, and as a result I will not argue that point. However, if we were to somehow get above the $19.50 level, I think at that point in time the buyers would start to assert their will again.