Which will breach? Support or Resistance?Market analyst – Revolution FX
Silver has strong support at $22.30 and strong resistance at $22.80. Today and after stronger US employment numbers, DXY found the support to rebound above the 96 mark. As the better employment data will lead the policymakers to have more hawkish decisions and end the asset purchases program a bit faster, the US dollar will get the support to raise, and stick markets will be a bit under pressure.
Hawkish policies supporting US Dollar, will put the stock markets under pressure and increase the safe-haven demand. So, where does the silver stand? Silver is one of the most used industrial commodities, which sometimes plays the safe-haven role as well. Decreasing stocks means less industrial demand for Silver.
On the other hand, we have the safe-haven demand increasing, as the omicron again increased the fears of the future of Coronavirus and financial markets. At the same time, the same reason is why we are waiting for weaker stock markets which are negative for industrial materials as well, including Silver.
The safe-haven demand of Silver is the second priority, and industry demand is the main market leader for Silver. Therefore, increasing US power and weaker stock markets have more weight in Silver than its safe-haven demand, so from the fundamental point of view, currently we can beat more on bears than bulls, unless if wall Street changes the tone.
From the technical point of view, 22.30 is the key support, and closing under this level can open the doors for lower levels, while 50 DMA at $23.75 can rebound the bulls to the market. Technical indicators in all H1, H4, and Daily charts, remain bearish, with RSI under 50, decreasing OBV trend line, and Parabolic SAR dots above the candles.