As the 50 Day Exponential Moving Average (EMA) enters Tuesday’s trading session, silver prices have retreated somewhat. So doing, the market appears to be adhering to the overall downtrend, so it will be intriguing to see how this develops. I feel that a reversal below the $20.00 level would likely result in an increase in selling. In such a scenario, I expect silver to fall below the $19.00 level within the following several days.
I would also like to point out that there is a gap on the futures chart roughly at the $19.00 mark, so everything fits together quite well. In such a scenario, it is probable that the market will continue to experience a great deal of negative, although there may be some support towards the bottom of the gap, around $18.50. Notably, the $18.00 level has provided support recently; so, a break below there would represent a significant capitulation for silver in general.
You should only trade with capital that you can afford to lose while trading derivatives. The trading of derivatives may not be suitable for all investors; thus, you should ensure that you fully comprehend the risks involved and, if required, seek independent counsel. Before entering into a transaction with us, a Product Disclosure Statement (PDS) can be received through this website or upon request from our offices and should be reviewed. Raw Spread accounts provide spreads beginning at 0 pips and commissions of $3.50 every 100k transacted. Spreads on standard accounts begin at 1 pip with no additional commission fees. CFD index spreads begin at 0.4 points. This information is not intended for inhabitants of any nation or jurisdiction where distribution or use would violate local law or regulation.
There are reasons in favor of full capitulation, especially if a recession is imminent and silver demand would almost likely decline. Remember that silver is currently more of an industrial metal than a precious one.
Consequently, if we surpass the $21 level, I believe this market has sufficient momentum to pursue the 200-day exponential moving average. This would certainly be related to a weakening US currency, so keep an eye on the US Dollar Index.