Silver price rally monster. As of this writing, silver is up more than 5% for the day.
The precious metals space is in for a nice bid as the US Dollar pulls back after setting resistance at 110. A Dollar that will see more reaction following the release of CPI data tomorrow and the decision on Fed rates next week. A weaker dollar means more continuation for silver.
On the daily chart for the US Dollar, I’m watching a close daily candle below 108. If that happens, we could see a drop in the dollar back to 105. This wouldn’t just be positive for precious metals and other commodities , but will also boost stock markets, cryptos, and currencies like the Euro and British Pound.
Last week I gave my analysis on the price of silver. I mentioned that our May 2022 short targets were met when silver reached $18. This is a huge support zone and a weekly close below $18 does not bode well for silver.
As you can see, we actually bounced back to $18. Now the question becomes: are we starting a new uptrend from this major support?
Much depends on macroeconomic events and the US dollar. Personally, I am not yet convinced by the reversal of the dollar. I see this as a setback.
However, the techniques present a bullish case. With today’s monster rally, silver is looking to close above the lower high at $19.25. I drew this on the board above. A lower high is what maintains the current downtrend. When it breaks, it means the downtrend is over. Silver looks very bullish by this yardstick.
Silver could pull back and retest this zone, but if we close below $19.25, the momentum dies. I am now looking at the $21 area as it is a major resistance area.
In terms of fundamentals, it should be noted that silver at $18 means that most silver miners are not making money because the price is below the cost of production.
In summary, it is still too early to call the bottom and a reversal. I would like to see a reversal pattern set in place and that is what I will be watching. Readers will be notified when I find this signal. The decline in the US dollar is a setback for now. For now, a further pullback in the dollar means more strength for silver. I would approach it as a profession.