Silver prices remained steady, closing at $36.84 with low trading volumes as US markets were closed for a holiday. The ongoing US trade war created a cautious vibe in the market. Technically, silver is on an upward trend, forming a double-bottom pattern. However, a doji pattern indicates a temporary pause. Traders are keeping an eye on important resistance levels, with the highest price this year at $37.31.

Bullish Momentum Indicator

The Relative Strength Index (RSI) suggests a positive outlook, indicating the potential for price increases. Key resistance levels include $37.00 and $37.49, with a target of $38.00. If silver drops below $36.00, it could test $35.82 and possibly $35.00 before approaching the 50-day simple moving average (SMA) at $34.39. Silver is a favored asset because of its history as a store of value and a medium of exchange. Silver prices often react to geopolitical events, interest rate changes, and the strength of the US Dollar. Demand from industries like electronics and solar power also impacts prices. The Gold/Silver ratio serves as a measure of relative value and can indicate future price movements. With US markets closed, silver’s stable price around $36.84 was expected. Ongoing trade tensions between major economies caused participants to be cautious, leading to a “wait-and-see” approach. Thin liquidity likely added to this restraint instead of promoting active price discovery. From a technical view, the double-bottom pattern is significant. It usually indicates a potential rebound. However, the doji suggests some uncertainty and possible fatigue after the recent price increase. While the overall sentiment remains positive, expectations should be tempered. Resistance levels will play an essential role in the near-term direction. The $37.00 mark is the first hurdle and a psychological barrier supported by past price movements. The high at $37.31 and the level at $37.49 are also of interest as potential targets if momentum continues. Attention may also shift to $38.00, where selling interest could increase.

Vulnerable Momentum and External Shocks

The RSI still shows a positive outlook, comfortably positioned without signs of divergence or overbought conditions. As long as it remains stable, it suggests that dips in price might be short-lived. While momentum is present, it’s susceptible to external shocks or sudden increases in dollar strength. On the downside, there is a clear support level. Falling below $36.00 might lead to a test of $35.82—this is the first line of defense. If it drops further, $35.00 becomes critical both technically and psychologically. A sustained drop could bring the 50-day SMA into focus, currently around $34.39, indicating a wider unraveling of recent bullish trends. Beyond the technical aspects, silver reacts to broader forces. Global tensions can affect not just market sentiment but also actual demand, especially in sectors like electronics and solar manufacturing. Over time, a strong correlation between industrial demand and forward silver contracts has been observed. Changes in trade policies can quickly impact these demand chains. In the macroeconomic sphere, expectations around interest rates and currency values contribute to daily price fluctuations. The US dollar often acts as a counterbalancing force—its strength tends to limit silver price increases, while its weakness supports gains. This relationship has been consistent over many years, especially during changes in monetary policy. It’s also important to consider relative valuation. The Gold/Silver ratio, a tool used by cross-asset strategists, provides valuable insight. An increase in this ratio may indicate gold is outperforming or silver is undervalued. Conversely, a falling ratio often coincides with silver price rallies, especially when risk appetite improves. Monitoring this ratio alongside absolute price levels adds another layer of understanding. In the upcoming days, low trading volumes and a lack of major economic data may heighten the impact of news-driven shifts. Technical levels are established, but they could be disrupted by external factors. Price adjustments could be quick if large funds change their positions, particularly those that are responsive to momentum and dollar changes. Create your live VT Markets account and start trading now.

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