The Silver price started strong on Friday's trading session, but quickly gave back gains as uncertainty persisted. Currently hovering near the 50% Fibonacci level from the previous upward move, it could attract considerable interest.
Silver Price Technical Outlook
- The weekly chart shows a hammer formation, indicating potential support from buyers below.
- A break above Wednesday's shooting star candlestick would signal a move higher towards the 200-Day EMA, which sits just below the $22 level.
- This presents a short-term opportunity worth considering.
Conversely, if silver drops below Tuesday's candlestick, it could see a move down towards the psychologically significant $20 level, with any further decline likely causing market disruptions. Given the high volatility of the silver market, it's essential to be cautious with your position size.
Interest rates and the strength of the US dollar also influence silver pricing. An increase in interest rates often drives the dollar higher, reducing the amount needed to purchase an ounce of silver. With the chart indicating a significant inflection point, attention must be paid to the next impulsive candlestick. Breaking above the $22 level may lead to a rise towards $23.50, but keeping a close eye on both the silver and gold charts is vital, as the two markets tend to follow each other.
Keep in mind that the industrial portion of the silver market is probably going to continue to be somewhat negative as central banks around the world keep their interest rates high. This is designed to slow down the economy and bring down inflation. If inflation starts to drop, that could help silver in the long run, because it then removes that barrier. That being said, as long as central banks are extraordinarily tight with their monetary policy, it does make a certain amount of sense that silver might be a laggard when it comes to precious metals, due to the fact that the industrial component could be an outsize factor. Another thing to pay close attention to is whether or not the greenback makes another strong run, although it’s worth noting that the two don’t necessarily have to be negatively correlated. In general, I do like the idea of buying silver on dips and we certainly have had a nice dip that we can take advantage of at a major technical area. Volatility will continue to be an issue, so keep your position size reasonable.
Ready to trade our daily Forex analysis? We’ve made a list of the best FX trading platforms to trade Forex worth using.