By FXEmpire.com
The silver markets fell hard on Tuesday as the “risk off” trade has come back in full force. The Dollar gained overall during the session, with major help from the Euro in general. The Greek leftist parties have shot down any ideas that they are willing to accept the continued austerity, and this looks like we are entering a very dangerous phase of the European crisis now. With this being said, anything that was remotely a “risk on” trade was sold off hard.
The silver markets have two components to them: Inflationary concerns and industrial demand. With the Dollar gaining, there is little to push precious metals higher at the moment. This includes the silver markets, or at least that part of the fundamentals. As for industrial demand, there is going to be much concerned over the ability for economies to grow as the world looks to head into a possible financial crisis out of the EU. It really doesn’t matter how you look at it, there is no reason the silver markets would be strong at the moment, so the breakdown wouldn’t have been a major surprise.
The $30 giving way is a significant development. This area has been a strong support area recently, and also has serious psychological significance as well, being a large round number. The support level was from $31 to the $30 level, and this “zone” is now broken as the daily candle is finally closing below it. With this in mind, the market suddenly looks very weak.
The market is now a sell only one for us as long as we are below the $30 mark. The market should continue to be weak going forward, as the silver markets need to have calm and economic growth in order to sustain any real momentum to the upside as the markets are extraordinarily sensitive to turmoil in the economic picture at the moment. We suggest selling rallies and new lows as long as we can stay below that $30 level. As for buying, we would need to see a couple of days above that mark to consider it.
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Originally posted here
