Retracement levels are also influencing the price action. I’ve identified the key range as $45.55 to $121.67. Its retracement zone at $74.63 to $83.61 is providing resistance inside the moving average range.
The major retracement level support is $60.83. It is 50% of the all-time high. If you recall, buyers came in last week at $61.00, fueling a two-day rally to $74.57.
I think the key level to watch this week is the 61.8% price at $74.63. Overtaking this with conviction could create enough upside momentum to trigger a strong rally into the resistance cluster at $83.61 to $83.63.
If we don’t get a bullish catalyst soon, sellers are likely to take control, making the market vulnerable to a retest of the wide support zone at $61.00 to $58.49.
Headlines Are Driving This Market More Than Fundamentals
Fundamentally, I think bullish traders have been doing a great job at stabilizing the silver market after a rough stretch, but it still feels like the price action is being driven more by headlines than a bona fide bullish catalyst. Although the bias is to the downside right now, I don’t feel it’s in a clean bearish trend. It’s hard to tell if we’re setting up for the next rally, or just reacting to shifts in rates, geopolitics, and expectations around the Fed. And, by the way, those appear to be the three main factors influencing the price action. To be more specific, today’s movement seems to be the product of comments from Fed Chair Powell, President Trump and geopolitical risks and the move in yields.
Powell Cooled the Rate Hike Fear and Silver Responded
On Monday, Powell may have lifted the pressure off the market when he made it clear the Fed is not in a rush to hike rates just because oil prices are rising. For most of March, silver struggled as traders feared higher rates would stick around or even move higher. But Powell cooled that expectation. The latest data shows the markets have basically priced out a rate hike this year, which removes a major headwind for silver.
