- Silver rallied slightly during the early hours of Tuesday, sitting just above the psychologically important $25 level.
- The precious metal has had a much-needed pullback over the last few days, after a huge run higher.
- Whether or not silver can continue to rise remains to be seen, but a pullback could do a lot of good for the market, as it has had a nonstop run higher from the $20 level.
If the market breaks down below the $25 level, it could potentially drop down to the $24 level, an area that has been a bit of a magnet for price over the last several months. This would give traders who missed the rally to the upside an opportunity to pick up silver at a better price. Any pullback at this point in time could be thought of as value.
If the market somehow breaks below the 50-Day EMA, a much deeper correction could be in the cards, but the 50-Day EMA sits almost $2 below where we are right now. Alternatively, if the market turns around and takes out the high from a few days ago, it opens up the possibility of the market reaching toward the $27 level. Breaking above the $27 level opens up the possibility of a move to the $30 level, which has a certain amount of psychological importance and will cost a lot of headlines.
Pay Attention to the US Dollar Index
Traders should pay attention to the US Dollar Index because silver and the US dollar have a negative correlation most of the time. However, this is not always the case as silver also has an industrial component to its pricing. If there is a lack of industrial demand, it will weigh upon the price of silver.
In conclusion, silver has had a much-needed pullback after a huge run higher. The market is sitting just above the psychologically important $25 level, and a pullback could do a lot of good for the market. Traders should keep an eye on the $24 level, which has been a magnet for price over the last several months. Breaking below the 50-Day EMA could result in a much deeper correction. On the other hand, breaking above the high from a few days ago could open up the possibility of the market reaching the $27 level and beyond. The US Dollar Index and industrial demand are also important factors to consider when trading silver.
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