Silver gapped higher on Wednesday, as interest rates relaxed a bit, as word got out that the Americans and Iranians were talking.
Silver
Silver gapped higher to kick off the trading session here on Wednesday, but we have seen a turnaround, and it does show signs of exhaustion. Ultimately, I think this is a scenario where a lot of traders are looking at this through the prism of whether or not interest rates in America will start to calm down or will they not.
There have been a lot of headlines coming out of the Middle East involving the war and that is the main driver of interest rates overall. After all if energy becomes a bit scarce then it drives up inflation and therefore it keeps the Federal Reserve on the sidelines, driving up rates. That is the main problem that we have at the moment and of course silver is a great place to find liquidity, especially if you have been involved in it for some time.
Technical Support and Resistance Levels
The silver market, breaking above the $70 level, was a bullish sign. The question now is whether or not we can hold because if we break down below there then it is possible that we may crash back towards the 200-day EMA. In that environment you are looking very much like a market that is perhaps determining whether or not the 200-day EMA can continue. I think ultimately the 200-day EMA can continue to offer support unless something truly bad happens.
To the upside it is very possible that we have a little bit of a barrier here at about $75 at least so far that is how it is acting. $80 above is where the 50-day EMA currently sits. I think you have got a situation here where there is still a bit of an overhang and despite the fact that the market has been so strong over the last 24 hours I think you still have to look at each rally a little bit suspiciously and you will have to be very nimble if you plan on taking advantage of it.