(MENAFN- Daily Forex)

• Silver has rallied quite nicely during the Wednesday trading session as we continue to see the US dollar struggle just a bit.
• Ultimately, this is a market that given enough time will probably try to get to higher levels, with the first area of interest as far as I can see being the $39 level as it is a large, round, psychologically significant figure.
• Beyond that, I would be looking at the crucial $40 level, an area that obviously is a large, round, psychologically significant figure, and an area that previously had offered a massive amount of resistance.

Underneath, I see the $37.50 level as potential support, and we did in fact bounce from there already this week. Furthermore, it's an area that has been previous resistance, and therefore a certain amount of“market memory” should be found in that region. If we do in fact break down below that level, then I'd be watching the 50 Day EMA near the $37.05 level that is also rising.

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The upside is obviously the favorable direction to be in this market, but I also recognize that silver is extraordinarily volatile anyway, so it's worth watching whether or not we can find some type of unidirectional move Dollar

Keep in mind that the US dollar is negatively correlated with silver most of the time, and that means that if the US dollar starts dropping against other currencies, as it has during the day on Wednesday, it makes sense that silver will rally. This does not necessarily have to be the correlation that we see, which is that more often than not it ends up being that way.

On the other hand, a lot of what's going on might have something to do with the central bank interest rate policy, because higher interest rates typically will work against precious metals, and rates currently are being priced in as having several cuts later this year, at least that the Federal Reserve, and that is going to remain supportive for silver. All things being equal, I think this is a“buy on the dips” scenario.

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