Silver: Extended but Not ExhaustedSilverOANDA:XAGUSDThecantillonreportXAGUSD | 4H | January 2, 2026 The Setup Price: $74.52 AVWAP: $54.36 (price trading 37% above) HTF Bias: Bullish Let’s be clear about what we’re looking at: silver has gone parabolic. A 37% premium to AVWAP is not normal. But “extended” doesn’t mean “short it.” Regime Analysis Price is above AVWAP. The regime is bullish. This is where discipline matters most. Every instinct says “this is too high, it has to pull back.” And it probably will. But shorting a bullish regime because it feels overextended is how traders blow up. The framework is simple: above AVWAP, we buy dips. We don’t short strength. The Statistical Picture Look at where price is relative to the sigma bands: ∙+1σ: $63.85 — already left behind ∙+2σ: $73.35 — price just cleared this ∙+3σ: $82.84 — next measured target Price at +2σ means we’re two standard deviations above fair value. Statistically, this is rare air. But in trending markets, price can walk along the upper bands for longer than anyone expects. Volume Profile Tells the Story Here’s the key insight: look at the POC at $48.54 and that volume cluster between $48-52. That’s where the majority of trading occurred. Everyone who accumulated silver in that range is now sitting on 50%+ gains. They’re not selling — they’re riding. Meanwhile, anyone who was short or waiting for a pullback has been completely left behind. That creates a psychological trap: the higher it goes, the more painful it becomes to chase, and the less supply enters the market. This is what institutional accumulation looks like when it finally moves. Months of sideways, then a near-vertical repricing. The Macro Tailwind This move isn’t happening in a vacuum. With the Fed resuming balance sheet expansion and gold targeting $5,000/oz according to major bank forecasts, silver is playing catch-up. The gold/silver ratio had been historically stretched — this is the mean reversion. Precious metals are the original Cantillon trade. When central banks print, hard assets reprice first in the hands of those closest to the money creation. Retail figures it out later. The Playbook This is not a “chase here” setup. But it’s also not a short. Three scenarios: 1.Pullback to +1σ ($63-64 zone): This would be the ideal entry for anyone not already positioned. A 15% pullback in a bull regime is a gift, not a warning. 2.Consolidation between $70-75: If price chops sideways here, it’s building a new volume node. Watch for the next leg to target +3σ ($82.84). 3.Blow-off to +3σ ($82-83): If we get vertical extension without a pause, that’s where I’d expect the first real profit-taking. Not a short trigger — but a place to reduce long exposure if you’re holding. What I’m NOT doing: Shorting this, fading the move, or trying to call a top. The regime is bullish. Full stop. Current Stance If you’re in, hold with a trailing stop below $63 (the +1σ level). If you’re out, wait. Either we get a pullback worth buying, or we don’t — and missing a move is better than forcing a bad entry. The hardest part of trading is doing nothing when the chart says “wait.” This is one of those moments.