During Tuesday’s trading session, silver markets have retreated somewhat as the US dollar has gained a little steam. The U.S. CPI statistics came in at double what was expected, causing a rush to “risk off.” Whether silver goes down from here is an entirely separate question, but silver appears to be an easy short.
If silver breaks below the $19 level, there is little to prevent it from falling to the $18 level. The $18 level has been a significant support level, therefore it is likely that we will struggle to fall below it. However, if we were to fall below that point, we would likely begin to fall apart.
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Alternatively, if we reverse course and break over the $20 mark, silver will likely threaten $21 quite fast. Then, we begin to pay particular attention to the 200-Day Exponential Moving Average (EMA), which is a longer-term technical signal that many people will follow. Regardless, you must keep a close eye on the US dollar in general, since if it begins to increase again, silver will be subject to significant pressure.
Also, industrial demand will play a role, and if we are indeed headed for a severe recession, it would not be terribly shocking to see silver come under intense selling pressure. Silver is volatile under the best of circumstances, therefore one must conclude that the situation will only worsen. In the near term, we are overbought, so this fits in fairly well.
