Silver Price Daily Forecast – Silver Starts To Rebound After Sell-OffSilver tries to recover from a sell-off that pushed it below $17.00.
Silver Video 22.05.20.
U.S. Dollar Strength Is An Obstacle On Silver’s Way Up
Silver tries to gain ground following the material correction after the major upside move.
The U.S. dollar presents a headwind for silver as it continues to gain ground against a broad basket of currencies. The U.S. Dollar Index has found material support near the 99 level and is currently located closer to 100. Stronger U.S. dollar makes silver less attractive for buyers who have other currencies.
Gold is rebounding after yesterday’s sell-off. I’d note that the sell-off in gold was not as material as in silver since the previous gold’s upside move was measured while silver made a really big move.
Gold/silver ratio continues to rebound from the 100 level and remains at highly elevated levels compared to pre-crisis levels. Before the coronavirus hit the economy and caused a deep correction in silver prices, gold/silver ratio was below 90.
The stock market direction may be less of a factor today as the U.S. stock market is mixed ahead of the Memorial Day weekend. However, there’s a possibility that the sell-off in Hong Kong, which was caused by China’s law aimed at containing protest activity, will increase demand for safe haven assets.
Silver met signficiant resistance at $17.50 while RSI was in the overbought territory and gold/silver ratio met support at 100. A combination of these factors have led to a material sell-off which pushed silver below $17.00.
No support levels have been formed between the resistance level at $17.50 and the support level at $16.50. However, silver received support above $16.50, which remains the nearest support level for silver.
In case silver settles below $16.50, it will gain additional downside momentum and head towards the 20 EMA level at $16.10. A move below the 20 EMA will push silver towards the 50 EMA at $15.80, right at the April highs.
On the upside, silver will have to deal with the major resistance at $17.50. RSI has pulled back from the overbought territory so it will be an easier task if right catalysts emerge.
If silver manages to settle above the resistance at $17.50, it will gain additional upside momentum and head towards the next resistance level at $18.15.