Silver has fluctuated during trading on Wednesday, as it has attained a crucial level of $25. This is an area that has been significant on multiple occasions, so it is not surprising to see some resistance in this area, not only from a structural standpoint but also due to the psychological significance of the $25 level. Having said that, I believe it makes sense that we draw back a little bit from here, perhaps seeking support near the $24.60 level, where we had previously encountered resistance.
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The $24 level is the subsequent support level below that, which is where we launched from during the prior session. Anything below that level would be somewhat unsettling for bulls, but it seems highly unlikely that it will occur. In spite of this, the market will continue to exhibit a great deal of volatility, primarily because economic data in the United States continues to be weaker than anticipated. Clearly, precious metals could benefit if the possibility of monetary policy easing sooner rather than later becomes a reality. However, silver has an industrial component that will almost undoubtedly be impacted if a recession occurs.
More often than not, market participants will continue to follow the gold market, as gold tends to precede silver and sometimes vice versa. The market will likely continue to be extremely volatile, so position sizing will be crucial as usual, as silver is, to say the least, extremely volatile. Due to this, it is probable that we will continue to need to be extremely cautious, but I do believe that the silver market is extremely bullish. I have no interest in shorting this market, at least not in the near future. However, if there is a significant stampede toward safety in the form of bonds, this market could be altered. However, we are currently nowhere near that level, so it does make sense to view pullbacks as purchasing opportunities.
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