Gold Market Wire
News, analysis and commentary for gold traders and investors
Silver Market Update
Silver Clears Horizontal Resistance
May 17, 2021 - (Gold Market Wire) - On Friday we laid out the next target for Silver, namely, clearing the $27.64 horizontal resistance, and this morning, early in the European session, we got it.
The next challenge will be a daily and weekly close above that level, but at the risk of falling victim to our emotions (trader's mistake Number 1), it looks like this market is ready to run. We've had two classic 'back and fills' in May, which the chart clearly shows, and that is making us even more bullish. These back and fills, that get followed by gaps (like today's) are really what bull markets are made of, and we remain positive in outlook. Yes, we retain the trading position of 2/3 of the length established earlier in the month, and the 1/3 we took off around $27.47 may have to come back on. That is how bullish we view the current situation. A bit of tail chasing? Probably, not as graceful as it should have been - but at around 1% we are willing to admit that we were, perhaps too cautious. Each market condition demands re-evaluation, and the key to trading is always, above all else, the willingness to admit that your outlook needs re-adjustment, because no one is always right. No one. So, we are looking at the possibility to reclaim our lost 1/3. Right now with equities fending off the bears last week, we may feel encouraged to do just that. Our main buy was just above $26.50, with smaller at $26.40, so we remain in the money nicely, and, of course, as we have counseled for some time, core positions were to be built and held.
The Precious Metals complex, which has lagged the general commodities euphoria of the past months, looks ready to play catch-up. Right now, the alpha is in Silver, and that is where we are keeping our attention. That is another indication of our bullish outlook.
Back on March 10, we wrote, "From a purely investment stand-point, one would be foolish not to add length here. The sell-off has created a very solid opportunity." That was our core build. We added that same day, that "We think (opinion only) that seasoned pros are starting to build length. If we really see $1680 as the bottom, we should be positioning length on any pullbacks over the next week or two. We can also be prepared to cut half of our new length if we get weekly closes under $1670."
That proved to be the correct strategy. We never got the close under $1670. It was the right place to build the core, and now, we run with it.