Silver attempted to rally during Wednesday's trading session, showing strength after a bullish Tuesday. However, the gains were partly given back near the $21.25 level, a previously noisy area. While there is uncertainty about whether we can fully recover, there is potential for a larger move. Breaking above Wednesday's session highs could trigger a bigger move, but current momentum appears to be lacking. This is expected since a base and confidence need to be built before investing in a volatile market that has recently experienced selloffs.
It's crucial to note that external factors such as the lack of industrial demand and the strength of the US dollar continue to impact the market, making volatile and sudden moves likely. Whether silver can break away from its negative correlation remains to be seen, but it's necessary for silver to take off. Higher US interest rates typically work against silver, but if it's seen as a way to preserve wealth, it could be a factor. The $20 level is a hard floor, and silver will likely find buyers on dips as long as it remains above that level. A breakdown below $20 would be extremely negative for the market, leading to a selloff not only in the silver market but also likely to be toxic for gold. Beyond that, we may see a huge move higher in the US dollar, considering the high levels of fear in the market.
Currently, industrial demand is a real concern due to the expected global slowdown. If we rally from here, breaking above the 200-Day EMA at around $22 will be challenging. However, anything above that would be impressive. Currently, a bounce is more likely than a significant move. The longer silver spends time going sideways, the healthier and more positive it will be for the market, as it could build confidence in a market that has recently seen a significant selloff. Furthermore, you should recognize that the market had been very noisy near the $20.50 level as it was significant resistance previously, so a little bit of “market memory” could come into the picture as well, offering recent support.
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