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Silver Continues to Test Major Support

Silver bounced a bit from a major support region during the trading session on Tuesday, as we continue to look at the $22 level as crucial.

The silver market rallied a bit during the trading session, and as a result, it certainly looks like it is trying to do everything it can to hang on to the $22 level. The $22 level is an area that’s been massively support multiple times and therefore, I think it continues to attract a certain amount of upward momentum. The market will then, I think at least, try to push towards $22.75 or so, and perhaps even beyond there. If we can break that level, then we can start to look at the 200 day EMA, and eventually after that, we would be looking at the top of the overall range which is at the $26 level. Keep in mind silver is very sensitive to interest rates and of course the US dollar so, that being said, I think you’ve got to look at this and keep an eye on the US dollar index as well as the 10-year yield.

They all coincide together to give you a picture of what might happen with this metal. Furthermore, you also have to pay attention to industrial demand because silver is much more industrial than gold, so although it does tend to follow gold longer term, the reality is that it also has quite a few more headwinds to come into the picture. If we break down below the $22 level, then it’s possible that we could go down to the $21 level, where I see even more support.

So, at this point I think a lot of value hunting is going on in the silver market and you just have to treat it as such. Be cautious with your position sizing and recognize the fact that the market is extraordinarily volatile. All things being equal, silver is at the bottom of the larger and longer term consolidation area, and therefore I think you need to look at this as a valuable opportunity more than anything else. With this, it’s only a matter of time before we do rally a bit at this point and reach toward the upper part of the consolidation over the longer term.

Source: Fxempire