Silver Forecast 04/09: Continues To Stretch (Chart)

(MENAFN- Daily Forex)

• During the trading session on Wednesday, we have seen silver continue to stretch higher, although I'd be the first person to point out that we are running a little hot here, and I think that it is probably only a matter of time before we get some type of pullback.
• The market being overextended and touching the top of a channel that we have been in for some time is something worth watching, and therefore I am particularly interested in seeing some type of pullback here, although I have no interest in shorting.

Technical Analysis

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The technical analysis for the market is obviously very bullish, but in the short term I do think we need to give back some of the momentum. After all, the market could not go in one direction forever, and of course silver tends to be extraordinarily and notoriously volatile. If we can break above the top of the candlestick for the trading session on Wednesday, that would obviously be a very strong turn of events, but I also think you've got a situation where traders will be best served to wait for some type of value.

I look at any pullback at this point in time as potential value, as this is such a strong bullish market. Ultimately, I do think that we will find that pullbacks will attract a lot of value hunting, and the most obvious spot on this chart that I see would be the $40 level. The $40 level would capture a lot of headlines and attention, and therefore I think you've got a situation where we probably would also have a lot of options traders interested in this level as well. Ultimately, this is a market that I do believe goes higher, it just needs to pull back a bit in order to collect enough buyers to get along with the idea of putting money to work. Anything below the $40 level probably means that we are going to go testing the bottom of the channel, perhaps closer to the $39 level.

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