Silver is steady around $38.00 in Monday’s European session, influenced by a positive shift in global risk sentiment. Last Friday, the price dropped below $38.70, which canceled a bullish cup and handle pattern on the 4-hour chart. Technical indicators show that bearish momentum is strong. The RSI sits near oversold levels at 32.00, and the ADX is at 36.86, indicating potential for further declines.

Support and Resistance Levels

The spot price is below the 50-period EMA at $38.49 and is testing the 100-period EMA near $38.03. Immediate support is at $38.00, with the next level at $37.50. Looking at the bigger picture, Silver remains bullish, staying within a rising price channel since April. It is above the 21-day EMA at $37.78 and the 50-day EMA at $36.45, which shows medium-term buying interest. If the price falls below $37.50, it could drop further to the $36.40-$36.00 range. On the other hand, if it rises above $38.50, bullish momentum could return, possibly retesting $39.53. Silver prices are affected by geopolitical events, industrial demand, and the strength of the US Dollar. Similar to Gold, Silver is often seen as a safe-haven asset, and its prices usually move in line with Gold.

Trading Recommendations and Strategies

Given the current bearish momentum, traders should be cautious of further declines. This trend is supported by a strong US Dollar, as the DXY index has recently climbed above 105.5, which typically pressures commodity prices. The $38.00 level will be crucial to watch in the coming days. If you expect further declines, starting short positions or buying put options could be a good strategy if the price fails to hold its current level. A break below the $37.50 support would signal this approach, with targets around $36.40 to $36.00. Historically, when short-term patterns fail, a quick retest of lower support zones often occurs. Despite the current dip, the rising price channel from April shows underlying strength, supported by solid industrial demand. The Silver Institute forecasts record industrial use in 2024, driven mainly by solar panel manufacturing. This suggests that the current pullback might be a buying opportunity for medium-term traders. Traders looking for upside should wait for a confirmed move back above $38.50 before going long or buying call options. This would indicate a return of bullish momentum and suggest that immediate selling pressure has eased. Recapturing this level could open the door to retesting the recent high close to $39.53. The contrast between short-term bearish signals and medium-term bullish fundamentals hints at increased volatility. In this environment, options strategies like straddles could be beneficial, as Silver typically shows larger price swings than Gold. We are also monitoring Silver’s relationship with Gold, as Silver’s price often mimics Gold’s movements. Recently, the gold-to-silver ratio traded around 78, above its 20-year average. This suggests that Silver may be undervalued and has potential to outperform in a rally of precious metals. Create your live VT Markets account and start trading now.

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