Silver Futures Look Explosive

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Scott Pluschau for ETF Digest

NEW YORK (ETF Digest) -- The chart of silver futures is creating a combustion-like chamber for a sharp move one way or the other, and the longer it takes to resolve, the more explosive it becomes.

Why is this the case?

The bottom line is that futures are a zero-sum game. Everyone who is on the wrong side of all this volume/open interest of the past five days and has been putting on a swing trade is going to be wrong on a breakout or a breakdown.

When they close out their losses, the good traders will pile on to deliver more pain.

Typically when this happens, we get a move that is twice the distance of the consolidation range in a fraction of the time it took to form it.

Which way will it go? I have no idea. But as a trader I know I would not want to be on the wrong side of the initiative move or break from the extremes of this balance area during the Comex session.

In my opinion, from an auction market perspective, any position trades placed inside the balance area are guessing or relying on luck in the daily time frame. And that doesn't last very long in the business of trading.

What is a balance area? A balance area is where the market has clearly found value in a particular time frame due to the tremendous trade facilitation taking place within the price range.