Silver, after experiencing a recent surge, has encountered a period of consolidation near the psychologically significant $25 level. As market movements remain influenced by this key figure, traders anticipate a mild correction. Technical analysis suggests a potential entry point around $24.50, a level that previously acted as resistance. To make informed decisions, traders should closely monitor critical support levels and the performance of the US dollar, which maintains a negative correlation with silver.
Following a rapid ascent, it is natural for silver to undergo a period of consolidation and a mild correction. This temporary pullback is seen as an essential step to attract more buyers and sustain the upward trajectory. Last week's weaker-than-anticipated inflation numbers in the United States prompted traders to seek wealth preservation, leading to a surge in silver prices due to decreasing bond yields.
Based on technical analysis, a potential entry point for silver is anticipated around the $24.50 level, which previously served as resistance. Monitoring this level closely is of utmost importance. However, if the market were to break below this level, traders should shift their attention to the 50-Day Exponential Moving Average, which acts as a critical support level.
A breakout above the current consolidation range could propel silver towards the $26 level and potentially even reach the recent highs near $26.45, given sufficient time. To determine the future direction of silver, closely observing the performance of the US dollar is crucial. The negative correlation between the two markets appears to be regaining prominence. The US Dollar Index serves as a valuable secondary indicator for silver, requiring careful attention.
Considering the current market conditions, shorting silver would only be considered if it breaks below the 200-Day Exponential Moving Average, which is currently near the $23.25 level. However, such a scenario seems unlikely in the near future. Therefore, the favored strategy in this market is to "buy on the dips." While a retest of the recent highs is anticipated, it is plausible to expect a short-term pullback before reaching that point.
Silver's consolidation near the $25 level presents a potential entry point around $24.50, previously a resistance level. Traders should closely monitor the 50-Day Exponential Moving Average as a critical support level. A breakout could lead silver towards $26 and beyond.
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