Silver Signal Today 25/03: Pulls Back After Rally (Chart)

(MENAFN- Daily Forex) Potential signal:

• I believe silver will continue to be bullish, and if we can break above the highs of the Monday session, ostensibly the $33.33 level, then I think we will make a move to the $34 level next.
• The stop loss placement of $33 should be more than enough for the short term move.

Silver initially did rally a bit during the course of the trading session on Monday but then turned around to show signs of weakness. By doing so, we have formed a bit of a shooting star candlestick, so the question now is whether or not traders can push this market to the upside. While this is a very ugly candlestick, I don't necessarily think it changes anything, at least not from a longer-term standpoint.

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I think there's plenty of support below, most certainly at the $32.35 level, an area that's been important multiple times in the silver market. Furthermore, we also have the 50 Day EMA racing toward that area, and that should continue to be an indicator that a lot of people will be paying close attention to. With this, I think it sets up a“buy on the dips” type of market, at least for the time being. After all, silver will continue to move right along with the risk profile of financial markets, and of course the global economy, but we also have to pay close attention to the US dollar.

The US dollar did strengthen during the day on Monday, and that's part of what we are seeing here. As soon as the US dollar starts to roll over again, silver will be a major beneficiary, and therefore I think you need to keep an eye on the US Dollar Index, or at the very least the EUR/USD pair in order to get an idea as to what the US dollar influence on silver will be.

If we turn around a break above the $33.33 level, then it's likely that silver will go looking to the $34 level next, which is an area that's been somewhat resistant. A break above there then opens up the obvious move to the $35 level, where I think we eventually end up given enough time. That being said, be very cautious with silver, because it is a very volatile and dangerous market at times and can cause a lot of damage if you are not careful. Position sizing in this market is everything.

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