- The recent trading session saw the XAG/USD currency pair initially pull back, only to show signs of strength again.
- However, there is still quite a bit of noisy behavior between here and the $24.60 level, and resistance at the $25 level, which suggests that we could be overstretched.
- For this reason, traders need to be cautious about buying silver at this point and wait for a pullback in order to buy silver at a cheaper price.
Waiting for a Pullback to Start Buying
The $23.50 level is a significant area of previous support and should offer buying pressure. However, if we break down below there, we could go looking to the $22.40 level, which is right at the 50-Day EMA and rising. It's important to note that this is a situation where we will continue to see a “buy on the dip” mentality going forward. But that doesn’t mean traders should chase the market to the upside.
If we were to break above the $25 level, then we could potentially see a big move to the upside. On the other hand, if we turn around and break down below the 50-Day EMA, then it’s likely that we would see a huge dump lower, although that is unlikely at the moment. In general, I think it’s going to continue to be very noisy.
While silver is typically viewed as a wealth preservation asset, it may underperform gold due to being an industrial metal. The market continues to see concerns about a potential recession, which raises questions about the level of industrial demand for silver. Keep in mind that the industrial demand should slow down over the next couple of months, so I think that does keep a little bit of a lid on the market. However, we will have to follow price more than anything else as price is king.
At the end of the day, traders should look for a pullback in silver that they can take advantage of. While there may be some noise in the market, a "buy on the dip" mentality is likely to prevail. It's important to watch for potential resistance levels and pay close attention to global economic trends that could impact silver prices. Overall, a cautious approach is recommended, as the silver market may be prone to fluctuations and uncertainties in the coming weeks and months.
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