Silver Technical Analysis
The silver market fell initially during the trading session on Tuesday to fill the gap from the Monday session and has since bounced. The $60 level looks as if it is offering a bit of support, and it is a large, round, psychologically significant figure. The headlines, of course, will continue to pay close attention to the $60 level, but if we were to break down below there, then I’ll be watching the $57 level. Anything below there, then I would anticipate that silver could drop to the $50 level. Rallies at this point, I think the 200-day EMA sitting right around the $67 level could be a target, or you could also think of it as a potential ceiling for the silver market.
Currency Pressures and Supply Deficits
The US dollar remains fairly strong, and as long as that’s the case, I think silver probably struggles. Typically, there is a negative correlation over the longer term. Speaking of the longer term, I am bullish on silver eventually, but I also recognize that the market is trying to simply find a reason to go higher, and the lack of supply eventually will be a major factor, as there isn’t enough silver to satiate demand over the longer-term.
Right now, though, it looks like we’re focusing more on the US dollar and, of course, interest rates. As things stand right now, I’m still somewhat bearish on signs of exhaustion in the silver market, at least until the bond market starts to attract buying, to push rates lower again.
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