Silver market heading near $21
Silver has fallen during the trading session on Tuesday, as we are now breaking below the 200-Day EMA. By doing so, the market looks as if it is heading toward the previous battleground near the $21 level. The $21 level previously has seen both support and resistance, and now will more likely than not attract a certain amount of value hunters.
It’s worth noting that it is also in the same neighborhood as the 61.8% Fibonacci level, that of course is an area that tends to attract a lot of attention. If we see a bit of support in that area, then it’s likely that we would have a buying opportunity. This does look a certain amount of sense, because we have seen such a bullish move higher. However, keep in mind that there is a strong negative correlation between silver and the US dollar. As the US dollar is trying to find its footing, silver will pull back a bit. However, we start to see the US dollar lose some strength, that should, all things being equal, give a bit of a lift for the silver market.
A different point of view of the silver situation
The alternate scenario is that the market were to break above the $22.50 level, which would be a significant move, due to the fact that there had been so much selling pressure in that general vicinity just last week. At that point, the market is likely to go looking to the $24.50 level, an area that previously had offered a lot of resistance. Keep in mind that silver really struggles to get above the $25 level, so anything above that level would attract a lot of “FOMO trading.”
The other factor is of course the fact that silver is an industrial metal, and that could be its Achilles’ heel at the moment. As the global economy seems to be slowing down, the demand for silver could drop. Nonetheless, there is significant support below marked on the chart, so it should be a very interesting place to watch.
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