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Is it time to short Silver?

In this video update, we discuss the opportunity for the commodity to reach lower prices. The Retail Market remains heavily long in the market which could see the price move back towards the recent lows.

Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.

In this video, we’re going to take a look at silver (XAG) since we could see a potential move to the downside.

Higher timeframe view

If we look at the higher timeframe view of XAG, we can see that the price is trapped within this range between 28.70s down towards the lows of 22.70s.

Retail Sentiment

So, it’s quite an extensive range that we’ve seen here. However, the retail sentiment suggests that 90% of retail market traders are long in XAG at the moment. That’s probably because the price is in an uptrend if you look where the price came back in February 2020.

We can see that the price has been predominantly up in the market until we hit these ranges. Now, the retail markets are heavily long at the moment. We could see some downside, maybe even a retest of these lows on the range around about 22.68.

Daily Timeframe

So, if we go down into the daily timeframe, we can see that the price has recently formed a new lower low. The price has now pulled back, and we’re seeing a double top pattern forming here. The market seems to be stuck around this 26.30 area. You can see here we found support, support again, support there, recent resistance, and now we’re back in at that point.

What I’d like to see from XAG is one or two things: the first thing is a nice trendline break to the downside. So, if you’re watching the daily timeframe and see the price break and close below this area, we could look for that move down.

Four-hour timeframe

Alternatively, you can go to a lower timeframe. You could be looking at the four-hour timeframe and look at some changes in trend in this area here.

Ideally, I want to see the price breaking these lows because that’s the previous structure low. Unless the market makes a triple top pattern, then that’s the low we need to break to get shorts. So, if the market came and broke this level here, we could look for a retest of this structure around 25.35 for further short opportunities.

But, the retail sentiment is heavily long. They are adding a few short positions, which is not what you want to see. You want to see addition to the long positions. Still, it doesn’t mean that we won’t see one more move to the downside. If we get to the bottom of this range before seeing some flips in the data, we could then see some upside at that point. Wait for the trend line break here with the change in trend on the four-hour. If we get that, look for targets down towards 22.70.

Thanks for watching this video update, and I’ll speak to you in the next one.

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