The Silver Correction Continues

The silver correction is now fully underway, down around 20% from the resistance just below $50. Overnight we have moved below the 50 day moving average down to $39.15. Most indicators showing silver is not oversold yet (though these rapid swings cause indicators to lag more than usual.) The majority of profit taking we saw was in futures, options and etf trading but mass amounts of scrap and physical bullion also came on to the market recently. Wholesalers and brokers have gotten some 1000oz bars and tens of thousands of 100oz bars to feed the investment demand for at least a few months going forward, though many silver products at wholesalers remain sold out and the market as a whole remains in a state of imbalance. I await further price movement downward toward the last support level just above $36. We are nearing many levels of key technical support and the areas I have pointed out below are obvious buy points and I just don't feel there is a strong chance of trading below the 2nd level of support at $33.75 for the time being, it is too soon.



Bottom of the Bollinger Band (20-2.00): 37.50
Support Level 1: 36.05
Golden Ratio Retracement: 35.25
100Day Moving Average: 34.05
Support Level 2: 33.75
200Day Moving Average: 28.20
Support and Beginning of Current Parabolic Trend: 26.50

This market has just seen the raging beast silver is becoming and it is only a matter of time before we break the previous intraday highs of 1980 and enter a world with no technical resistance. I will not be hedging my physical silver position with options or futures for downside protection, but leveraging my position with synthetic positions (likely long dated options) to maximize the future upward momentum I feel still lies a ahead.