News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Silver Market Update

Silver Approaching Channel Support

March 22, 2021 - (Gold Market Wire) - Silver has broken below support at 25.85 and is rapidly closing in on the major channel support line. We're getting close to a "do or die" scenario now, and the metals have their work cut out for them. Those who took out the 'scalpel' early on Friday got their chance to trade out, but it should be remembered that scalps (Brits read 'jobbers') are always day trades and nothing to be taken home over weekends. This morning you can see exactly why. The gap down is a negative for the market, and now has the added pressure of closing in on the long-term trend line.

...a moment of truth for Silver

The (very) disciplined amongst the trading community can buy this fall - fully aware of what lies ahead if we start closing below the trend line. For your average "click and pray" type trader, its probably not recommended as they tend to hold on through everything and sell out when leverage decimates them. That brings up the other point - if you use leverage here - you need serious psychiatric help.

All the above is merely a re-iteration of defining each trade (scalp, spec, position, core) so that it dictates your follow up behavior and helps you size it right at the outset.

As we back up for a wide view of the Silver market, we can see how important this support actually is.

...the big picture.

Unsurprisingly, Gold also is now sitting right on the trend line. No doubt, the market is poised. Is it preparing for "something", and is pulling back to a defensive position? Most likely , yes, it is - and that "something" is most likely an equity market sell-off.

...Gold hugs the line for security...

So, our boredom didn't last long ... and the market is now in serious play. Tightly placed stops are the order of the day, if you believe in the strength of the trend-line. The round number of $25.00 is horizontal support of its own, and could be the next target if we give way. It's certainly setting up for an interesting day, and we are thankful that we have steered clear of the trading book for more than a couple of weeks. The sidelines can be a good place for traders of metals, no matter what the perma-buls always say. The reason is simple: a lot of trading (and we mean a lot) is about surviving, i.e. avoiding disaster.

Our one maintained position is long the USD vs. the Euro, i.e. short EUR/USD. We are unlikely to adjust that anytime soon,. The Dollar continues to look strong, and we maintain a bullish posture. The chart now points towards 1.185 as the main challenge for the (few) bulls.

...picture of a USD bull run.

Lastly, but by no means of least importance, we must re-iterate the potential for a true stock market pullback that is developing. That alone should weigh heavy on the minds of those thinking to take on length against the trend line in Silver. If stocks truly move down, it is almost guaranteed that the Precious Metals will fall as well. In fact, it may be that this morning's sell-off in the metals is actually foreshadowing such a fall, as positions are closed out in anticipation. Buyers Beware!

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