(MENAFN- Daily Forex) Potential signal:

• The simplest signal for trading silver is if we can break above the high of the Monday candlestick.
• I will be a buyer with a stop loss at the low of the Monday candlestick, with an attempt and a target of $39.40 above.

During the trading session on Monday, silver was very choppy but it wasn't really convincing. At this point, the fact that we cannot drop further suggests to me that maybe we have started to find some type of floor, and what has been extraordinarily bullish market to begin with. That being said, there are some levels that I am watching that might give us a little bit of a“heads up” as to where we might go next.

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The technical analysis for this market is somewhat sideways in the short term, but longer term, I think you've got a situation where we are still very bullish, because we did stop to form a“higher low” than the previous one during the day. Even if we break down from there, I believe that the $37.50 level continues to be a massive floor in the market. After all, it was an area that was extraordinarily resistant previously, and therefore one would have to assume that there's a certain amount of“market memory” just waiting to happen here. Ultimately, this is a market that given enough time I do believe goes higher, some not really looking to short silver anytime soon. Looking at the upside, the $40 level is the most obvious resistance barrier that I see, and of course it has a certain amount of psychology attached to it.

If we were to break above the $40 level, then you have a real chance at the silver market, truly taking off to the upside, and going much higher, kicking off the next huge rally. At that point, I'd be looking for a move to the $42.50 level, which is the“measured move” of the consolidation area that we are in. Ultimately, I still like the idea of buying pullbacks and dips in this market, but I also recognize that there is a lot of noise out there, and of course we will have to pay close attention to the US dollar. Speaking of the US dollar it was a bit telling that despite the fact the US dollar was stronger during the day on Monday, silver held its own. This shows you just how bullish the market is over the longer term.

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