Silver Futures Index $SILVER (SILVER)

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Silver Continues to See Momentum Stall
By: Christopher Lewis | May 21, 2024

• The silver market has been on fire lately, and therefore we are getting into a dangerous situation. The market is overdone, and a lot of people are about to lose a lot of money if we get a sudden drop. (Something silver is notorious for.)

Silver Markets Technical Analysis

Silver has been back and forth during the early hours on Tuesday, forming a rather neutral candlestick with long legs yet again. At this point in time, I do think silver is due for a pullback, and the reality is that we will probably have a significant pullback sooner or later.

And it might actually be sooner at this point on the Relative Strength index. It looks like we are starting to roll over again, but we are very well ahead of the 70 level, which of course signifies overbought. So, at this point in time, I think we have one of two choices. We either go sideways for a while and work off some of the from, or we get a vicious pullback that shakes out a lot of the hot money.

The retail trader out there is over levered and silver will get smoked sooner or later. I’ve seen this happen a couple of times, especially in this market. So, the one thing that you need to do is make sure that if you get something like a $2 drop, it won’t wipe out your account. Because $2 seems like a lot.

The reality is we had about $1.70 worth of change from top to bottom. Just the previous session. What happens if we wipe out the $31 level? Well, at that point, I think we drop another dollar pretty quickly and we could even drop down to the $28.50 level, which would not change the overall trend at all. So recognize that you are extremely extended at this point, and although we could go higher from here, the more likely route is either sideways or down, at least in the very short term.

Longer term, we could go as high as $50 because it does seem like every time the market breaks above $30, it does try to make it to $50 and then it gets smashed, including the last time it did it, it went from $50 or just under $50, falling all the way back down to $12. So be careful. Silver is a dangerous animal.

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