During the day on Monday, the silver markets initially fell, but found enough support below to turn things around and form a nice-looking hammer. The hammer is situated right at the $19.50 level, which has been the bottom of significant support over the last couple of weeks.
Quite frankly, we been bouncing around between that level and the $20.50 level above, grinding away in a sideways manner in order to perhaps build up enough momentum to continue going higher.
Keep in mind that the US dollar has been strengthening, but quite frankly that may not make that big of a difference in this particular market because the run to the US dollar has been based more upon safety and a runaway from European assets more than anything else.
Because of this, silver has been strong against the euro, and of course the pound. With this, there’s a bit of a “knock on effect” when it comes to the futures contract that this chart represents.
Silver forecast: Silver continues to shine
Ultimately, I believe that we do break out to the upside but in the meantime at the very least I think that a break above the top of the hammer probably signifies of the buyers are returning to continue to bounce this market around.
You can make an argument for the 38.2% Fibonacci ratio been touched, and offering support. The 50-day exponential moving average just below should offer dynamic support as well, but we are not at that level quite yet.
At this point time, we have been buying silver in physical form in order to take advantage of longer-term moves, and believe that silver will continue to be attractive. There is also a bit of a “floor” at the $18 level in our estimation.
We have no interest in selling this market, and do believe that eventually we will break out and go much higher. The recent impulsivity in this market should continue given enough time, as breakouts like the one that we solve just a couple of weeks ago don’t happen that often, and almost always mean that big things are coming from the longer-term perspective.