Silver markets have broken down rather significantly during the course of the trading session on Tuesday to plunge below the crucial $22 level. The $22 level has been important multiple months back, with the exception of one time where we had falling as low as $21.50. It is because of this that I believe the market breaking down below the $21.50 level will bring in a massive amount of selling. That would obviously be extraordinarily negative, and it could open up a move down to the $20 level underneath.
SILVER Video 15.12.21
To the upside, the $22.50 level needs to be overtaken to become bullish. If we do not get that far in the air, then I think we probably just go back and forth in a relatively tight range, which does make a certain amount of sense considering that we are waiting on the Federal Reserve statement after the Tuesday meeting, which will have a major influence on US dollar pricing. Furthermore, people will be paying close attention to the idea of whether or not the reopening trade continues, or have we seen peak inflation? This of course has its influence on silver, as it is not only thought of as a precious metal by some, but it is also quite often traded as an industrial metal as well.
All of that being said, the candlestick on the Tuesday session was rather destructive, so I think at this point in time it is difficult to be overly bullish, but if you do see signs that we are recovering you could start to build a small position and perhaps add as it works out in your favor. Silver is very volatile under the best circumstances, so it should not be a huge surprise to think that it would be volatile heading into the holidays.
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This article was originally posted on FX Empire
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