Silver Price Analysis – Silver Falls Apart Early On Friday

Commodity

Summary:

Silver continues to see a lot of volatility, as the momentum has gotten out of control. With this, the pullback is something that will give traders things to think about this weekend.

Silver Technical Analysis

Silver daily chart.

The silver market initially tried to rally but then fell rather significantly during the early hours here on Friday, even breaking below the $100 level to reach near $95, an area that is round number, and seems to have been attractive for buyers.

We have turned around and recovered since then, but this to me looks a lot like serious problems just waiting to happen. It does make sense, after all; the silver market has been out of control for a while. Sooner or later, you see some type of deep correction or panic move. I have been warning about this for a couple of weeks now, and I suspect there are quite a few retail traders out there who have just blown their accounts.

Position Sizing and Market Volatility

This is the behavior of a market that is out of control. While you can make massive profits rather quickly, you can also get eliminated from the game just as quickly, and this is where position sizing matters.

The question now is whether or not we can stay above the $100 level on Friday at the close. That for me will tell you most of what you need to know about whether or not the correction is over. This is not a market you want to jump into with a huge position with this type of behavior at the moment. Quite frankly, this could be the beginning of something rather ugly. I would wait at this point until after the market closes to get a read on what is really going on.

Source: FX Empire

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