Silver markets fell during the session on Thursday originally, but as you can see bounced enough to form a hammer based upon the $20 level. This level has been resistance recently, and the fact that we have broken above it and pullback in order to form this hammer suggests to us that we could be going much higher. The next resistance we see is at the $22 level, and of course that area should offer some trouble for silver. However, if we can get above there, things get very interesting, very quickly.
The $25 level looks like it would be the next major resistance area, although we would see some resistance at $23 as well. That being the case, depending on which contract or CFD you are playing as relative to size, this could be an opportunity to make quite a nice profit in the silver markets which have been sold off rather drastically.
A lot of this will come down to the Federal Reserve and what they are going to do about quantitative easing, as if the market thinks that the tapering is not going to happen in September, the US dollar will get pummeled. By extension, the silver markets will rise rather drastically if that’s the case. On the other hand, the Federal Reserve could begin to taper in September, and if they do fully expect to see silver get punished. Right now, it’s difficult to hang onto a longer-term trade in any of the precious metals, simply because we do not know exactly what the Federal Reserve is going to do. This was exacerbated by the last minutes released, which of course showed several FMOC members concerned about the employment situation in the United States, and whether or not it warranted quantitative easing being tapered off of.
Going forward, we are trying to avoid expectations, simply because it is a really good way to lose money. We will simply pay attention to what the market does, and trade the silver markets that way. In the meantime though, it definitely looks like there’s about two dollars’ worth of movement to the upside about to happen.