- Silver markets initiated Thursday's trading session with a significant downward gap, signaling a prevailing negative sentiment. This downturn correlates with the recent surge in interest rates in the United States, which has cast a shadow over the precious metals sector.
- However, it is noteworthy that the market is currently perched atop the 200-day Exponential Moving Average (EMA), a prominent technical indicator that commands considerable attention.
- Moreover, this level is where a previous breakout occurred, hinting at the concept of "market memory."
Adding another layer of complexity, the 50-day EMA above presents a formidable potential resistance level. The 50-day EMA's predominantly sideways movement underscores the significance of this juncture. A break above the highs set during Wednesday's trading session could pave the way for an ascent towards the $25.50 level. It's essential to bear in mind that $25.50 has previously served as a substantial resistance zone, suggesting it may once again act as a significant barrier. A subsequent breakthrough could potentially open the door to the $26.50 level.
Conversely, descent below the $22.50 level could trigger substantial selling pressure in the silver market. It's crucial to remember that silver is inherently volatile, characterized by constant "push and pull" dynamics. Given the current market conditions, heightened volatility is anticipated. As such, it is prudent to exercise caution when determining position sizes, given the potential for market noise and erratic behavior. Silver is a beast most of the time, and in this time of uncertainty, I can’t see it being any different over the next few days. At this point though, there are plenty of buyers underneath that could continue to influence the overall attitude of the market.
Be Cautious
In summary, silver markets are grappling with a gap downward, largely influenced by the surge in US interest rates. The 200-day EMA provides a noteworthy support level, while the 50-day EMA looms as a significant potential resistance. The $25.50 level poses an important hurdle for silver, with the $26.50 level serving as a higher target. Conversely, a breakdown below $22.50 could trigger substantial selling pressure. Given silver's inherent volatility, traders should approach this market with caution, closely monitoring bond markets and global risk appetite as additional factors influencing silver's trajectory. Regardless, be careful here.
Potential signal: I am a believer that eventually most commodities will rally in this inflationary environment. I am a buyer of silver here, but have a stop at the 22.50 level, aiming for the 25.10 level.
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