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Vladimir Zernov

Silver Video 07.04.20.


Silver Heads Towards The 50 EMA

As I wrote yesterday, the breach of the key 20 EMA level was setting the scene for rapid upside momentum in silver. This is exactly what happened in practice since silver prices enjoyed fast upside soon after the 20 EMA was breached.

This upside move coincided with a major move in the equity markets and positive price action on the gold price front. The equity markets remain optimistic about stabilization on the virus front, while gold continues its efforts to settle above $1700.

In my opinion, gold’s upside is an important catalyst for the potential silver upside. If gold is able to gain ground above $1700 per ounce, more money will flow into the precious metal sector, which will benefit silver.

Meanwhile, the U.S. dollar is showing weakness due to optimism in the markets, and the U.S. Dollar Index is back below the psychologically important 100 level.

The U.S. dollar continues to serve as safe haven asset of last resort while the precious metal sector is periodically vulnerable to negative economic and healthcare data.

To continue the upside move, silver will likely require additional positive data on the healthcare front (investors should not expect any positive economic data in April as all economies are under heavy pressure from virus containment measures).

It remains to be seen how long the current optimism in the equity markets will continue since S&P 500 has already recovered from 2200 to levels above 2700.

The back end of this week is more data-heavy, and the markets will have to digest another U.S. Initial Jobless Claims report, which could create downside risks for many asset classes.

Technical Analysis

Silver broke through the 20 EMA and is heading towards the 50 EMA at $15.70. The 50 EMA level is the first major resistance level on silver’s way up. If silver manages to get past the 50 EMA, it will have a good chance to return to pre-crisis levels at $16.50.

The 20 EMA, which has previously served as resistance for silver, has become an important support level. Those traders who have missed the move would likely try to get into positions near $14.70 if such a chance presents itself.

In case silver drops below $14.70 and stays there, it will find itself back inside a trading range between $13.80 and $14.70.

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