The silver market has been fairly active over the past week, and it’s likely to find some new direction in the coming week; even after a slow start with Labor Day in the USA.
The chart above says a lot about the silver market as of late, trending and consolidating. At present the silver market can’t seem to make its mind up other than trending lower, and there is still plenty of room to trend lower. But, more importantly, there are large patches of consolidation for traders – even after the false breakout we had last week. What this indicates is that even when there is little trending in the market, there are still movements to play.
At present, momentum has dissipated from the market, and traders are now starting to look for some direction. When it comes to trading direction, a shift lower seems more likely on the surface of things; after all you never go against the trend.
In the event of a breakout (which I deem to be highly unlikely, but still possible) markets will look for confirmation before trying to push higher. Candles with large wicks and strong pull backs are likely and volatility will certainly be strong in the market. I would look for at least two bullish candles before changing my view away from bearish in this market. Even then I would still be questioning if there was room for some bullish momentum in the silver market, or if this was just a bump from fundamental data, or silver trying to follow gold on the charts.
Either way you look at it, silver is set for a move and markets will be watching as a result, albeit with baited breath as there is plenty of opportunity for this precious metal, with a lot less of the crazy moves of gold.
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