Silver stabilized near $47 on Wednesday after volatile trading. Analysts warn a drop below $46 could trigger deeper losses, while resistance near $50 may mark exhaustion. Sentiment appears overheated, suggesting caution amid growing retail enthusiasm.
- Silver was all over the place during the trading session here on Wednesday, as the $47 level ended up being a bit of a floor.
- That's not a huge surprise—it had been supportive previously. And with that being the case, I think you have to look at this through the prism of a market that is going to continue to be noisy.
- But if we were to break down below maybe $46, that could be bad.
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We'll just have to wait and see, but I am starting to see random people on the street talking about going out and buying silver—that started about a week ago. And few things are a harbinger of doom and death for the markets quite like when your Aunt Millie comes looking to buy whatever the hot asset is. I think we could see a little bit of a push higher, but if we see any signs of exhaustion, especially near the $50 level, it'll be very interesting.
To see if we show signs of that exhaustion rolling over, because if we do, that could be the first sign of the top being put in. Keep in mind that the $50 level has historically been very negative for silver, and although we did get a little bit of a squeeze above there, sooner or later, if we continue that overall pattern, we could find this market going to the $30 level. It's not necessarily something I'm calling for yet, but I think it will happen sooner or later.
Is There Another Leg Higher?
The question is, do we have another leg higher? I don't know. We'll have to wait and see. This nonsense about the U.S. dollar falling apart and therefore it's going to lift silver and gold has been exactly that. It's almost like people can't read a currency chart because the dollar has been strengthening the whole time. So, with that being said, expect volatility. I'm actually looking for signs of exhaustion to sell.
I would be pretty quick with my stop loss, though, in this environment. You are trying to swim upstream, but if you catch this as a trend change—and it looks a lot like distribution—man, the downside is way, way below.
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