Silver started to fall early on Tuesday but has since seen more dip buying later in the session.
Silver
Silver initially fell during trading here on Tuesday but continues to see support below the $60 level and, for the first time in a couple of sessions, is above the $60 level. This is a bullish turn of events, and we'll have to see how this plays out, but clearly, this will have people interested.
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With this being the case, I think you have to look at this as a market that is in a potential transition, but I would also keep an eye on the fact that the US dollar is strengthening against most currencies. And with that being the case, you need to see some type of cooling off of the greenback against multiple currencies to really get a bit of a tailwind for silver.
In the short term, I think this is a recovery that is probably long overdue. The question at this point in time is how long can it continue? I think the 200-day EMA is probably the ceiling, that's assuming we even get that far. And I am a little bit leery about buying silver for anything other than a very short-term position.
Market Outlook and Key Support Levels
Ultimately, this is a market that has been beaten down for quite some time, as inflation is a bit of a moving target. And of course, a lot of the hot money has come out of this market. Longer term, I do believe silver has huge demand with a lack of supply, but until the US dollar calms down, it is swimming upstream.
I'm going to be cautious here, maybe take a small day trade to the upside, but as far as a position trade or a swing trade, I'm looking for signs of exhaustion that I can start shorting.
If we were to turn around and break down below the $57 level, that opens up a drive to the $50 level where I think you'd see a lot of market memory come into play there. It's a level that goes back to the late 70s.
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