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Christopher Lewis

Silver markets gapped lower to kick off the trading session on Wednesday, only to fill the gap and show signs of strength again. Ultimately, this is a market that I think will continue to see a lot of volatility, and therefore you will need to be cautious about the position size that you put on. That is typically the way trading silver works anyways, because it is such a noisy contract. It is very thinly traded at times, so the moves can be quite drastic.

SILVER Video 08.10.20

Looking at the candlestick, you can see there is a lot of bullish pressure, but the 50 day EMA above continues to offer resistance. The 50 day EMA is an area that a lot of traders will pay attention to, and therefore signs of exhaustion would be jumped upon, and therefore it is likely that sellers will continue to run that picture going forward, especially as the US dollar strengthens.

The US dollar obviously has a negative correlation to sewer and has had a very strong negative correlation over the last 90 days. With this being the case, I think it is likely that we go much lower, perhaps reaching down towards the $22 level, and then the 200 day EMA. If we do break above the 50 day EMA on a daily close though, that could open up a move towards $27 where we have seen a massive amount of supply. Either way, I think this continues to be a very noisy market, not only due to the fact that it has a correlation to precious metals demand, but it also has an industrial component as well.

For a look at all of today’s economic events, check out our economic calendar.

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