EDITOR'S NOTE: Silver went “parabolic” last Tuesday. Phrasing it in that manner might generate some heightened level of excitement. But looking at the rally from a wide-angle lens, you can see that silver was simply testing its 10-month highs after finding technical support at the $22.00 level. In other words, silver is simply following the fundamental long-term expectations that many analysts had been assuming for years. These expectations were likely boosted by the sudden chaos that Russia brought upon Ukraine. The more interesting event to note is the nickel market short-squeeze. As the author below notes, silver is, indeed, a manipulated market. So was nickel. And with rising commodity prices across the board along with the uncertainty of base and precious metal supply, many of which are produced in Russia and Ukraine, what’s the likelihood that the institutional short-squeeze might spread to other metals as well, such as silver? The article you’re about to read focuses narrowly on the near-term market action. But it’s the potential cataclysmic movements that may take place in the coming months that you should be keeping an eye on.
Silver markets have gone parabolic during the trading session on Tuesday as we have broken above the $27 level rather rapidly.
Silver prices have shot straight up in the air during the course of the trading session on Tuesday as we continue to see a lot of panic in the precious metal sector. At this point, you cannot chase the trade because this is a massive move in silver. Silver will eventually fall, and in fact, it could even lead to some type of pullback in the gold market. Keep in mind that silver is highly manipulated, as several banks have been busted for doing exactly that. That being said, it is a bit difficult to imagine that this market continues this type of momentum anyway.
Silver Video 09.03.22
Source: FX Empire
Silver markets tend to be very volatile, so at the very least you need to keep your position size relatively small. I would anticipate that you should get an opportunity to pick up a little bit of value given enough time, so wait for some type of pullback in order to get involved at this point if you are not already at this point. You simply cannot chase this trade, and therefore I think it is a situation where you need to find lower levels to get involved in.
The $25.50 level is going to be a major support level, and therefore it is likely that we will see buyers in that general vicinity. The markets have gotten a bit crazy at this point in time, so trading them will be very difficult. The most important thing you can do is protect your account by using a reasonable position size. The size of the candle leaves no doubt as to the directionality of the market, but you cannot be a chaser here.
For a look at all of today’s economic events, check out our economic calendar.
Originally published on FX Empire.