By FXEmpire.com
The silver markets fell during the session on Thursday as the risk off trading comes back into vogue. Recently, we had informed you that the $27 level was significant support that we felt could lead down to the $25 level. The breakthrough during the session during Thursday’s decidedly negative action, should lead us to that lower level.
Above this area was the cap of $30, and it looks like that resistance level will not be challenged now. The action for the session was decidedly bearish, and the fact that the candle finished and lows of the day does suggest that there will be further momentum to the downside. Looking at it this way, it does look like we are still in a “sell only” marketplace. Obviously, the trend has been down so we don’t want to buy anyways.
With the US dollar strengthening overall, it is very likely that many of the commodities out there will shrink in value. Silver has the double whammy of course of be in an industrial metal as well is a precious metal. Because of this, silver really does need a relatively stable economy in order to sustain rallies. With the global financial situation and uncertainty the way it is, we suspect that silver will be a “sell on the rallies” type of market for some time.
If the market can break below the $25 level, which we consider minor support, the next stop should be the $20 mark. This of course gives us plenty of room to let the trade run, and we will stay short for some time now. The upside in silver will be based upon knee-jerk reactions and what is going on with the US dollar on the whole.
However, with the Euro struggling against the US dollar, it’s somewhat builds in strength for the greenback. Because of this, it may be some time before we see any real strength in the silver markets. If you are looking to play against uncertainty, you will more than likely be better served in the gold markets as that metal doesn’t have the drag on it that industrial demand dollars on silver.
Click here to read Silver Technical Analysis.
Originally posted here
