- Thursday's trading session witnessed a substantial rally in silver, with the $22.50 level proving to be robust support.
- The 61.8% Fibonacci level holds particular significance for traders, coinciding with the bottom of the overarching trading range.
- The market appears to be taking on the characteristics of a double bottom formation, a factor that could significantly influence its future direction.
Notably, as I capture this video, we are currently testing the upper boundary of the inverted hammer pattern from the preceding session. Should we successfully breach this level, it opens the door to the possibility of an ascent toward the 200-Day Exponential Moving Average (EMA), positioned near the $23.25 mark. Surpassing this could potentially set the stage for a more substantial upward trajectory, even reaching as high as $25.25, which marks the upper limit of the consolidation range.
A noteworthy aspect is the relatively weak performance of the US dollar during the trading session, which has acted as a favorable tailwind for silver. The historical inverse relationship between silver and the US dollar often comes into play, implying that a continuing decline in the dollar's strength could further aid silver's rise.
Be Cautious
Conversely, should the US dollar regain strength, a scenario that might unfold considering the Federal Reserve's commitment to robust monetary policy, it could exert pressure on silver's value. The sustainability of this stance remains to be seen, introducing an element of uncertainty into the equation. Anticipate a significant back-and-forth movement in the market, underlining the need for cautious position sizing.
Should a decline occur from the current levels, the $22 level is poised to offer support. A breach beneath this could potentially lead to a more pronounced drop toward the $20 level. Assessing the candlestick pattern observed in Thursday's session, there's a substantial likelihood of a determined effort to break out to the upside.
Summing up, the trajectory of silver displays a marked rally, with the $22.50 support level playing a pivotal role. The 61.8% Fibonacci level and double bottom pattern contribute to the evolving narrative. The ongoing test of the inverted hammer pattern's upper limit holds significance, potentially paving the way for a march toward the 200-Day EMA. However, navigating the market entails acknowledging the ebb and flow of the US dollar's strength and its implications for silver. With a backdrop of potential back-and-forth movement, adopting a cautious stance and judicious position sizing will be integral in skillfully navigating this dynamic terrain.
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