Is Silver the Next GameStop Squeeze?

Now it looks like retail traders want to squeeze silver higher. Let's look at the chart after an explosive open on Monday.
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First GameStop  (GME) - Get Report, then AMC Entertainment  (AMC) - Get Report. And now - silver?

The precious metal is having itself a solid day, with spot silver prices up about 8% on the day.

Talk of a silver squeeze started trending over the weekend, as Reddit traders and others started talking about the next asset to squeeze higher.

As a result, silver gapped up notably on Sunday evening, tagging a high just over $30 at around 3 a.m. ET on Monday. Still up more than 8% on the day, the move in silver has also sparked a rally in the iShares Silver Trust ETF  (SLV) - Get Report, which is up about 7.8% so far.

Interestingly, the enthusiasm hasn’t trickled over to yellow metal. Gold futures were up about 0.7%, while the SPDR Gold Trust ETF  (GLD) - Get Report was up just 1%.

Can silver continue higher? Let’s look at the charts.

Trading Silver

Daily chart of the SLV ETF.

Daily chart of the SLV ETF.

Not everyone has access to the futures market so I’m looking at the SLV ETF.

For anyone that needs a reminder in silver’s potential, just look back to this summer. On July 10, the ETF was struggling with $17.50 resistance. On Aug. 10, it hit its 52-week high up at $27.39.

The one-month rally was good for a gain of more than 56%. However, six weeks later and silver was down about 25%.

In other words, the momentum in this one can go both ways. It’s okay to be wrong, but it’s not to stay wrong when we’re talking about an asset that can make these kinds of moves.

Monday's open was great, thrusting the SLV ETF over the summer high and key resistance near $27. However, it’s struggling to hold these marks. That makes sense, as it gapped up so considerably. 

It’s bouncing nicely now, giving bulls hope. At this point though, they really need to see the stock get above and stay above the $27.50 level.

If it can do that, then Monday’s high near $28 is in play. Above $28 and $30 is on the table, followed by the 161.8% extension up near $31.70. If it clears $32, bulls may start talking about the two-times range and 261.8% extensions, near $34.30 and $38.60, respectively.

What about the downside?

The obvious concern here is the gap, which is all the way down toward $25.50. Failure to hold $27 keeps Monday’s low in play. Below that and a gap-fill is possible.

For now, let’s keep the $27 to $27.50 zone as our area of interest. Above it is bullish and below is less so.