Silver prices - is the volatility expected to subside and lower prices to more buyable levels?

On Monday, March silver futures showed signs of a significant bearish reversal, with prices falling sharply from their highs to close near the day's low—a pattern known as a "buying exhaustion tail." The daily chart also indicated a notable bearish "key reversal" down. For bulls, the next goal is to close above the strong resistance at Monday’s record high of $82.67, while bears are looking to see prices close below the solid support at $67.50. Initial resistance levels are at $73.00 and $74.00, with support at $70.00 and then $69.00.

Spot Silver (XAG/USD) dropped on Wednesday after breaking below Monday's low of $70.52, briefly touching $70.07 during thin holiday trading. Late profit-taking helped it rebound to $71.64 by the close, marking a loss of $4.60 or -6.04%. This price action confirmed the reversal seen on Monday, suggesting further downside may be ahead. According to my swing chart analysis, the prior upswing ranged from $45.53 to $84.03, setting the main retracement target between $64.79 and $60.25 (the 50%-61.8% zone). Previously, traders were quick to buy smaller pullbacks of $3.00 to $6.00, but with recent large and volatile declines of $20.00 to $24.00, it's uncertain how aggressively they will step in, especially given the increased fear that comes with higher volatility. Despite this, the underlying fundamentals remain bullish, though trading has become more expensive due to higher prices and margin requirements. Incidentally, following Friday’s extreme volatility, the CME Group increased margin requirements for precious metals twice within the week, affecting gold, silver, platinum, and palladium contracts. These changes, effective after Wednesday, are designed to address market volatility and ensure proper collateral coverage.

Looking ahead, industrial demand for silver is expected to grow in 2025 alongside a supply deficit. However, trading conditions have changed - success now requires more strategy and finesse rather than simply riding momentum. While I remain positive on silver's long-term outlook, I'm shifting from chasing price rallies to seeking value entries. At current prices, I don't see much value, and anticipate any minor rallies (dead cat bounces) may attract selling. Being a longer term, continuous contract futures market participant who isn’t overly concerned with contract expirations, I prefer entering around the retracement zone of $64.79 to $60.25 in the new year, and if that doesn’t hold, I'll consider the 50-day moving average at $56.73 as my backup entry point.

For the immediate, there is now resistance between 72.080~74.570. If we blow past this higher, then short bets from these levels maybe in some immediate hurt. The expanded chart with isn't too wide in the time horizon is showing very strong support between a wide 4-odd point range 65.645~69.290. Chart below is for reference:

Chart (SIH26)