Silver Video 25.06.20.
Silver Gains Ground Despite Stronger U.S. Dollar
Silver managed to stay above the support level at the 20 EMA at $17.50 despite stronger U.S. dollar as gold/silver ratio returned back below 100.
The U.S. Dollar Index is trying to settle above the resistance at 97.5 as traders remain worried about the second wave of coronavirus. While stronger U.S. dollar is bearish for silver as it makes it more expensive for buyers who have other currencies, the strength of the American currency is offset by the declining gold/silver ratio.
Yesterday, I wrote that the nearest resistance level for gold/silver ratio was located at the 50 EMA at 101.80 and that a move above this level would open the way to the next resistance at 108.
While this threat is still real, gold/silver ratio is currently trying to settle below the 100 level which is bullish for silver. In order to continue the downside move, gold/silver ratio will have to get below the 20 EMA at 99.40.
Meanwhile, gold continues to trade above $1750, which is bullish for the whole precious metal segment. In my opinion, gold has plenty of room to develop upside momentum, especially if equity markets find themselves under more pressure due to worries about the second wave of coronavirus.
The technical picture for silver has not changed for quite some time. Silver has a very solid support at $17.50. This support level has been already tested many times and proved its strength since each attempt to get below $17.50 is met with increased buyer activity.
In case silver gets below such a strong level, it will likely gain material downside momentum as many traders who have put their protective stops below $17.50 will rush for exits.
In this scenario, silver will quickly reach the next important support level near the 50 EMA at $17.00.
On the upside, silver will need to get above the resistance at $18.00 to get to the test of the resistance near recent highs below $18.50. RSI is at very comfortable levels so silver has plenty of room to develop upside momentum in case the right catalysts emerge.
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