Silver Markets Run Into A Brick Wall

(May 19th, 2022 - Christopher Lewis)

Silver markets have rallied initially during the trading session on Thursday, slamming into the $22 level. This is an area that is going to be crucial for the market.

Silver Markets Technical Analysis

Silver markets have rallied significantly to kick off the trading session on Thursday, slamming into the crucial $22 level. This is an area that previously had been supportive, but now looks like it is going to be resistive. A pullback from this area would make quite a bit of sense, especially if the US dollar starts to strengthen again. Remember, silver is especially sensitive to the US dollar, and therefore you should keep in mind what the US Dollar Index is doing anytime you trade this market.

On the upside, even if we do break above the $22 level, I do not find it very palatable to get long of silver. If I were to be a buyer of precious metals at the moment, it would be gold, as it offers more protection against inflation. Remember, silver has a significant industrial and commercial component to it, so if we truly are going into a major slowdown, it is difficult to imagine a scenario where silver will do well over the longer term. With this in mind, I believe that we will continue to see sellers every time it rallies a bit too much, taking advantage of what is typically a very volatile market to begin with.

If we do break out to the upside, it is not until we clear the $23 level that I can take any rally serious. At this point, I would also need to see the US dollar falling across-the-board, something that does not look likely to happen for any sustainable amount of time. With this, I am looking for signs of exhaustion on short-term charts.