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Silver Forecast: Significant Decline Into the Weekend

Looking ahead, traders should keep an eye on any potential developments that could change the market's outlook.

The Silver price (XAG/USD pair) experienced a significant decline in Friday's trading session as investors turned to the US dollar ahead of the weekend. The precious and industrial metal has a negative correlation with the US dollar, and concerns regarding a potential economic slowdown have led to a decrease in demand for silver.

Silver Looks Negative

  • Although a complete collapse of the silver market is unlikely, the metal's current outlook is rather weak.
  • Any short-term rallies will likely be viewed with suspicion, especially with the 200-Day EMA positioned just below the critical $22 level.
  • Previous attempts to break above this level have failed, and it's probable that it will continue to provide significant resistance.
  • Unless this resistance is broken, there's little reason to believe that the market will move in a bullish direction.

Additionally, there's evidence suggesting that the market may break below the support area established by the 50% Fibonacci retracement level. If this happens, it's likely that the market will start selling off, potentially leading to a move down to the $20.25 area, which corresponds with the 61.8% Fibonacci level. In a worst-case scenario, the market could drop down to the psychologically significant $20 level, which would attract a significant amount of attention and generate a lot of noise.

If the market were to break above the 200-Day EMA, it could bring in fresh buying. However, given the negative outlook of the market, it would take a significant effort to make this happen.

Overall, it seems that traders are finally acknowledging the possibility of a global economic recession. With less demand for silver due to its industrial uses, it's likely that the metal will continue to face a considerable amount of negativity in the near term.

Looking ahead, traders should keep an eye on any potential developments that could change the market's outlook. A significant shift in global economic conditions or any positive news in regards to the US dollar could cause the market to move in a more bullish direction. Until then, it's likely that silver will continue to face downward pressure. That being said, keep your position size reasonable due to the fact that silver ends up being very volatile at times, therefore you can take significant losses if you are not cautious. With this, I still like the idea of fitting rallies, but I would do so in increments.

Silver chart

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Christopher Lewis
About Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.


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