- Silver experienced a significant drop during Thursday's trading session, reflecting the ongoing market volatility, particularly in light of the Federal Reserve's more hawkish stance than anticipated.
- Despite pausing the rate hike cycle, Federal Reserve Chairman Jerome Powell and the committee have indicated that rate increases are likely to continue in the future.
- This has led traders to factor in the potential for the US dollar to continue its upward trajectory.
Overnight, the US dollar rallied significantly against several currencies, exerting downward pressure on silver. However, the 200-Day Exponential Moving Average, located near the $23 level, is expected to offer substantial support. As long as we remain above this level, we are technically still in an uptrend. It's also worth noting that we are near the 50% Fibonacci level, which should provide additional support. For what it is worth, the silver market is trying to show signs of life as we have since recovered during the day. This market will remain volatile going forward, which is typical for silver.
Silver is Determining its Next Move
A break below these levels could pave the way for a move down to the 61.8% Fibonacci level, and subsequently, the $22 level. A break below the $22 level could trigger a massive sell-off, potentially down to the $20 level. This level marks the starting point of the entire upward move and is a significant psychological threshold. It also carries a lot of "market memory". If we were to reach this level, it could signal serious trouble for silver. It's important to remember that there is a strong negative correlation between the US dollar and silver, a trend that is likely to continue shaping this market. This was seen later in the session, as the US dollar sold off, while silver recovered.
All things considered, silver is currently in the phase of determining its next move, and the 200-Day EMA will be a crucial indicator that many will be closely monitoring. In conclusion, silver's significant drop during Thursday's trading session reflects the ongoing market volatility and the impact of the Federal Reserve's more hawkish stance. Despite the downward pressure, technical indicators such as the 200-Day EMA and the 50% Fibonacci level are expected to offer substantial support. However, the market's future trajectory will depend on a variety of factors, including the performance of the US dollar and market sentiment.
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