Silver has initially tried to rally on Thursday but gave back gains as we continue to see plenty of ugliness in this market.
Silver initially tried to rally during the session on Thursday but has given back quite a bit of the gain as we continue to see silver perform poorly. After all, silver is an industrial metal and we are in the midst of kicking off a pretty major recession. Furthermore, the US dollar spiked during the day at one point, so that of course puts a lot of negative pressure on silver as well. If the market were to suddenly see the US dollar selloff, then we could see a little bit of follow-through on the attempted rally.
Regardless, I do think that the best route for trading silver is to wait for signs of exhaustion that you can sell. I don’t have any interest in buying silver, and quite frankly if I was to buy a precious metal, it would be gold. Silver has too many problems with it right now, not the least of which is the fact that industrial demand is almost certainly going to be falling apart. In that environment, it’s difficult to imagine a scenario where one would be comfortable owning this contract.
The $19 level above is significant resistance, and we now have the 50-Day EMA approaching that level as well. This indicator is quite often followed, and as you can see on the daily chart has shown itself to be somewhat reliable. Because of this, I think we have a situation where the market has to be looked at through the prism of a “fade the rally” type of market. I do not have any interest in trying to get too cute with this, I think we are in a downtrend and that’s really all you need to keep in the back your mind.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.