Silver Shows Strength Despite Stronger Dollar And Weaker Gold
Yesterday, I wrote that the $14.00 support level was very important for silver since a breach of this level could quickly take the precious metal to $13.30. The $14.00 level has been tested several times now, but silver still manages to hold above it.
Interestingly, silver is able to show some strength despite upside in U.S. dollar and downside in gold. The U.S. Dollar Index is currently trying to get above the psychologically important 100 level. Stronger dollar is a bearish factor for commodities since it makes them more expensive for buyers who have other currencies.
Silver’s ability to stay above $14.00 despite the downside in gold is even more surprising. Gold has served as one of the preferred safe haven assets during this crisis, and downside in gold typically caused a corresponding downside in silver.
Meanwhile, the U.S. stock market is showing some weakness at the opening, indicating that it is in the risk-off mode.
It remains to be seen whether silver can withstand a combination of stronger dollar, weaker stocks and weaker gold, and stay above the $14.00 level. At this point, it’s hard to believe that further intensification of the sell-off in various asset classes (if it happens) will not have a negative impact on silver.
The $14.00 level remains the key battleground for silver. It has already made several attempts to go below this level, but each such attempt was met with healthy buying activity.
In case silver manages to settle below $14.00, the road to the next support level at $13.30 would likely be fast since many traders have had the time to accumulate their positions around the $14.00 level, so those with shorter trading timeframes would be getting out of their bets.
On the upside, silver will have to deal with resistance near the 20 EMA at $14.70. With each day that silver stays close to $14.00, the 20 EMA comes down a bit, and it has already reached the local high point of the current rebound.
Going above the 20 EMA will be crucial for the continuation of the upside trend in silver. In this case, silver will have a chance to move towards the 50 EMA at $16.00.
This article was originally posted on FX Empire
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