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Silver Video 22.07.20.
Silver Tests The $23 Level Before Pulling Back
Silver rallied to $23 and then pulled back as the U.S. dollar continued to lose ground against a broad basket of currencies while gold/silver ratio extended its decline.
The U.S. Dollar Index has managed to settle below June lows and tested the multi-month lows that were reached back in March. The American currency remains under pressure amid vaccine hopes and a shift of save haven buying to precious metals, which benefits silver.
Gold continued its upside move and tested new highs above the $1850 level. The unprecedented monetary stimulus from central banks and governments around the world continues to push gold prices higher.
If the current trend continues, gold may soon test the all-time high levels which were reached back in 2011. Such a move will be very bullish for the whole precious metal segment including silver.
Meanwhile, gold/silver ratio continued its decline and tested the 81 level before rebounding above 83. Currently, gold/silver ratio is located at levels not seen since 2019. Gold/silver ratio has reached an extremely oversold territory which is a sign that a rebound may be coming soon.
Technical Analysis
Silver managed to get above the resistance at $21.15 and gained huge upside momentum which led to the test of the $23.00 level. Currently, RSI is in the extremely overbought territory, and the risk of correction is high.
Silver’s rally was very fast, similar to the downside move which happened back in March. As a result, gaps between levels are wide, which will lead to increased volatility in the upcoming trading sessions.
At this point, the nearest support level for silver is located at $21.15. Most likely, silver will get some support above this level from traders who continue to bet on the rally.
In case silver gets below $21.15, it will head towards the next support level at $19.50 but may experience support at higher levels along the way.
On the upside, a move above $23.00 will open the way to the test of the next resistance level at $24.50. It should be noted that silver has not traded that high for many years so previous resistance levels may have little relevance for silver’s trading dynamics.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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