Silver Futures Index $SILVER (SILVER)

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Silver Continues to Rally
By: Christopher Lewis | January 24, 2024

• Silver had a strong session on Wednesday, as we have broken well above the $22.50 level, showing a nice rally from the $22 support region underneath.

Silver Markets Technical Analysis

You can see silver rallied rather significantly during the trading session on Wednesday. At this point, it looks like $22 is going to continue to offer significant support, and the way we are behaving now suggests that silver continues to go higher. The next target will be the 200-day EMA, which is near the $23.20 level and then after that, we have some structural resistance near the $23.50 level. With that being the case, we could get a little bit of a pushback here, but I think the dip will end up being a buying opportunity.

It’ll be interesting to see whether or not we can break above the $23.50 level because it does open up the possibility of another move to the $24.50 level. The $24.50 level being broken then opens up a move to the $26 level, which is the top of the overall longer-term consolidation phase that I see probably being a majority of what we do this year.

On the downside, if we were to turn around and break down below the $22 level, then we could get a move down to the $21 level, but that seems less and less likely at this point. I think we’ve got a situation here where market participants will continue to buy dips, but you also need to keep an eye on interest rates because there is a negative correlation between interest rates and silver. Furthermore, there is a negative correlation between silver and the US dollar.

In general, I do think this bodes well for the short term. Whether or not silver takes off for a longer term buying hold trade, we’ll have to wait and see. But there’s also the other impact of economic and industrial demand for silver. Keep in mind, it is an industrial metal as well. So that is something that must not be ignored. If you are going to play this market, keep in mind silver is very volatile. So, you want to keep your position size at least reasonable as silver can be quite volatile and cause major damage to your portfolio if you are not careful.

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