The silver market continued its downward trajectory during Tuesday's trading session, amplifying concerns as we find ourselves positioned below the pivotal 200-Day Exponential Moving Average (EMA). This occurrence bears a considerably negative implication, casting a shadow over the potential for further declines and raising the prospect of testing the crucial $22.60 territory, a region of substantial historical significance.
A breach beneath this level could pave the way for a subsequent test of the $22 mark, a psychologically significant threshold and a point that marks the absolute nadir of the overarching price range. A sustained dip beyond this juncture could potentially trigger a more substantial descent, driving silver toward the $20 level.
It's evident that the market is in search of a semblance of stability. However, the critical negative correlation to the US dollar remains a salient factor. The inherent volatility stemming from this relationship has manifested as turbulent price movements, reflecting the complex dynamics between silver and the US dollar. It appears that a period of equilibrium could potentially emerge, but in the absence of such a balancing act, the repercussions could be dire.
On a more positive note, the presence of the 50-Day EMA around the $24 mark offers a glimmer of hope. This level assumes significance not only as a psychologically pertinent round figure but also as the 38.2% Fibonacci retracement level from previous highs. Consequently, it is a juncture likely to command the attention of many traders. It's essential, however, to acknowledge that the prevailing volatility is poised to persist, potentially intensifying if the US dollar continues its upward trajectory.
Pay Attention to the Industrial Aspect of Silver
- In the broader context, it's imperative not to overlook the industrial aspect of silver. As an industrial metal, silver's trajectory is partially linked to the pulse of the global economy.
- Therefore, the present decline could be indicative of the market's response to concerns regarding a potential slowdown in global economic activity.
- If this scenario materializes, it's reasonable to anticipate a corresponding reduction in the demand for silver. In such a scenario, the confluence of a strengthening US dollar and diminished demand could potentially breed a toxic cocktail for the silver market.
While the recent retreat has indeed been severe, a measured perspective is warranted by looking at the longer-term chart. Despite the sharp oscillations, the market remains ensconced within a realm of range-bound movement.
Potential signal: If we can retake the 23 USD level, I am a buyer of silver. I would have a stop loss at the 22.45 level, with a target of 24.80 above.
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