On a Knife Edge as Key Confluence Area Reached

Silver prices, charts and analysis:

• Silvers Yesterday’s rally stalled as a combination of rebounding risk appetite and a key confluence weighed on prices.
• Technicals are currently offering some mixed signals on the weekly and daily timeframes highlighting the importance of the $24.20 handle.
• USD and the NFPs The report, which closes on Friday, may hold the key to silver’s long-term direction.
• For more information price action, chart pattern and moving average,check out DailyFX Education Section.

Silver (XAG/USD) Fundamental Background

Silver’s price has seen a significant rally since bottoming out around $20 on March 10th. It’s been three consecutive weeks of gains as the rally finally appears to have stopped near the key confluence near $24.00.

An interesting point to note is that the recent uptick to the upside coincided with the collapse of SVB Bank and the expected impact by market participants. Like gold, silver appears to be one of the major beneficiaries, but the recent US dollar weakness continues to push the bulls forward.

We’ve seen an overall improvement in market sentiment and demand for riskier returns, which could weigh on silver prices going forward. It’s a big week for the USD as he has the NFP’s jobs report on Friday and could play a big role in the Silvers’ next move. But prior to that, there are several Fed policymakers talking today with dollar bulls, hoping for some form of hawkish rhetoric to thwart the dollar’s recent slump.

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Technical outlook and final thoughts

Just looking at the broader picture, silver looks poised for a retracement following the recent $4 rally, coupled with some of the fundamental factors mentioned above. The technicals themselves seem to paint a mixed picture right now with both bullish and bearish signs.

SILVER (XAG/USD) Weekly Chart – Apr 4, 2023

Source: TradingView, chart created by Zain Vawda

The weekly silver chart above shows the price currently testing the long-term trendline (May 2021 high) and a key support area that has found resistance near $24.20. The weekly bullish candle close from last week, combined with the golden cross pattern, hints at further gains as the 20-day moving average is about to cross the 100-day moving average.

SILVER (XAG/USD) Weekly Chart – Apr 4, 2023

Source: TradingView, chart created by Zain Vawda

But when we break it down to the daily timeframe, we see more of the aforementioned mixed technical signals. The daylight candle closed yesterday as The Hanging Man. This usually signals a possible turn of direction and pushes downwards, although the 20-day moving average is above his 50-day moving average and above his 100-day moving average, which is already a golden cross. formation can be seen. A mixed signal is clearly an indication of the importance of the $24.20 handle and offers many scenarios that could develop from here.

A potential rebound from here and further price declines could see strong support near $23.20, but below that the MA is providing support. Both the 20-day and 100-day MAs are near $22.50, which may be difficult to break given the weaker dollar. A pullback like this could serve as an opportunity to find better risks to reward the opportunity, as the bullish trend is intact.

On the other hand, a bullish breakout of a key confluence and a daily candlestick close above the downtrend line near $24.20 could see further gains for silver. The first key resistance area to the upside is around $26, which silver has not reached since April 2022. But whether either scenario continues may depend entirely on his NFP job report due Friday. Interesting times ahead for silver prices.

Written by: Zain Vawda, Market Writer DailyFX.com

Contact and follow Zain on Twitter. @zvawda