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Christopher Lewis
Silver

Silver markets have rallied initially to kick off the trading session on Monday but seem to be struggling with the idea of breaking above the $26 level. While I do not necessarily think that this is a reason to start shorting the market, I do recognize that the $26 level was previously a significant support level. Because of this, do not be surprised at all to see this market pullback in the short term. If we can break above the $26 level, that would obviously be very bullish and therefore could send the market back towards the major supply area of $27 above there.

SILVER Video 13.10.20

Keep in mind that this market does tend to move in reaction to whatever is going on with the US dollar, typically with a negative correlation. Because of this, if the US Dollar Index is rising, that does tend to be bad news for silver. You should also keep in mind that silver is also an industrial metal, so there is a certain amount of industrial demand factored into the equation as well. In that sense, it is quite a bit different than gold, but the two markets do tend to move in the same general direction.

With that being the case, I think we are looking at a pullback that will probably attract a lot of buying pressure underneath as it should continue the uptrend. However, if we were to break down below the $23 level, I think that would be a very bad look indeed, perhaps bringing more sellers back into the marketplace. Again, pay attention to the US dollar as it will give you a bit of a “heads up” as to where we are going.

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

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