- Silver experienced an initial rally during Wednesday's trading session as markets eagerly await the FOMC statement.
- The statement's impact on the US dollar will undoubtedly influence silver, making it essential to monitor its effects closely.
- Market participants are currently concerned about the market's behavior and the future stance of central banks globally regarding tightening or loosening monetary policies.
The 50-Day EMA is positioned at the $22.42 area, just above the 200-Day EMA, creating substantial technical support. Consequently, any pullback will likely encounter buying pressure in this region. A breakdown below this level could send silver prices towards the $21 mark. This scenario would likely be triggered by a tight central bank policy in the United States, which would bolster the US dollar and raise interest rates. The knock-on effect could slow down industries and reduce the industrial demand for silver.
On the other hand, if silver prices rally from their current level, the $23 mark will present a significant resistance barrier, potentially leading to a move toward the $24 level. The $24 level has seen considerable noise in the past, making it unsurprising if silver struggles to break above this vicinity. The historically important $25 level lies above this point, and breaking above it could set off a substantial rally in the silver market.
Volatility is Expected
It is crucial to acknowledge that the silver market is likely to experience heightened volatility in the coming days. Position sizing remains one of the most effective ways to safeguard your account if you decide to trade in this highly volatile market. A prudent approach would be to observe how the day unfolds following the FOMC statement before making any trading decisions.
At the end of the day, the silver market is currently in a state of anticipation as it awaits the FOMC statement, which will significantly impact the US dollar and, in turn, silver prices. Volatility is expected, and investors should carefully manage their positions and strategies to navigate this uncertain period. Paying close attention to the statement after the FOMC meeting as well as the press conference will be crucial to figure out where silver may go, while watching the US Dollar Index. All things being equal, this is a market that will continue to be very noisy, and therefore the most important thing you can do is exercise caution.
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