Silver Video 06.05.20.
Silver Remains Range-Bound And Trades Close To $15.00
Silver continues to trade below the 20 EMA near $15.00 but stays well above the key support level at $14.60. The equity market is optimistic despite disappointing ADP Employment Change data, but this optimism is not widespread today.
Oil is declining after the recent rally while gold is losing ground as well. At this point, the key question for gold is whether it will be able to settle above $1700 per ounce.
In this scenario, I’d expect an additional flow of money into the whole precious metal segment which will be bullish for silver. Meanwhile, weaker gold is a bearish factor for silver.
The U.S. dollar is also not helping silver upside today as the U.S. Dollar Index has breached the 100 level, and the American currency continues to strengthen against a broad basket of currencies.
Today, the market setup is unfavorable for silver but it stays close to the $15.00 level which highlights the continuous demand above $14.60.
More robust action can be expected tomorrow as the U.S. will release its weekly Initial Jobless Claims report which has had a material impact on various asset classes during the coronavirus crisis.
The report is guaranteed to look grim as the economy is hit hard by virus containment measures but market’s reaction to bad data is still a mystery as Fed’s major involvement via unlimited QE has distorted the marketplace.
Silver continues to trade in the range between the support level at $14.60 and the resistance level at $15.50, although it is currently stuck between $14.60 and the 20 EMA near $15.00.
The local trend is to the downside, but silver is still in the rebound phase from a big picture point of view. In case silver manages to settle above the 20 EMA, it will have a good chance to test the 50 EMA level and to continue the rebound, which may ultimately lead to a test of pre-crisis levels at $16.50.
The breach of the support level at $14.60 will likely lead to a rapid downside move as many traders have had the time to establish speculative positions above $14.60 and will likely head to exits if silver dips below this level.