- Silver initially plunged at the open on Friday, only to turn around and show signs of life again.
- That being said, the one thing that I see on this chart is plenty of resiliency, and I would be watching closely to see whether or not that remains.
- There is a massive gap that sits below, and that should offer a certain amount of support, but it also tends to attract traders to try to “fill the gap” eventually.
External Factors
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Keep in mind that silver is highly sensitive to the US dollar, and that of course will have a major influence on where we go next. The US Dollar Index of course should be watched any time you are dealing with silver, and if we start to see significant US dollar positivity, that could push this market a little bit lower. However, one thing that is obvious at this point in time is that there has been a bit of bullish pressure in this market over the last couple of weeks, especially as the United States now added silver as one of its “essential minerals.” This means that the US may be demanding more silver.
Silver of course is highly sensitive to global economic growth, and of course industrial demand. Silver is an industrial metal every bit as much as it is a precious metal, so therefore you need to think of it through the prism of both possibilities. In other words, there’s a lot of moving pieces.
Technical Analysis
The technical analysis for this market is rather strong, as we continue to see buyers come in on each and every dip it seems. Ultimately, this is a market that given enough time should go looking toward the $40 level above, where I think it will find a certain amount of resistance. It is a large, round, psychologically significant figure, and an area that will obviously attract a lot of headlines. Breaking above the $40 level then allows silver to go looking toward the $42.50 level based on the “measured move” of the previous consolidation. I remain bullish on silver but recognize a short-term pullback might be needed.
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