Technical Analysis Indicates Further Downside for Silver Prices
On Thursday, spot silver prices tumbled, losing the $29.00 per ounce mark due to pressure from a surging dollar. FXStreet analyst Christian Borjon Valencia provided a technical analysis of the silver price trend on Friday.
Valencia noted that silver prices have fallen sharply over the past six days, losing more than 7%. On Thursday, silver prices dropped over 2.40% after the Federal Reserve left interest rates unchanged and hinted at the possibility of only one rate cut instead of the three cuts predicted in the March Summary of Economic Projections (SEP).
At Wednesday's post-meeting press conference, Fed Chairman Jerome Powell reiterated that while inflation has significantly decreased from its highs, it remains too high. He emphasized that this year's inflation data has not yet provided the Fed with "more confidence" that it is approaching its 2% target, maintaining a tight monetary policy stance.
Spot silver closed down 2.6% at $28.94 per ounce on Thursday. The ICE Dollar Index ended the session up nearly 0.5% at 105.23, with a stronger dollar being unfavorable for silver.
Valencia noted that the Relative Strength Index (RSI) has turned bearish, and the momentum supports further downside in silver prices. Silver shorts are now targeting the 50-day moving average support.
From a price action perspective, Valencia writes that silver's downtrend is capped by the 50-day moving average (DMA) near $28.74 per ounce, seen as the first support level.
According to Valencia, if the daily close is below the 50-day moving average, silver prices could fall to the next support level, the 100-day moving average at $26.40 per ounce, and then the May 2 low of $26.02 per ounce.
Conversely, if silver buyers regain the $29.00 per ounce mark, they will need to push towards the $30.00 per ounce level to retest the year-to-date high of $32.51 per ounce, Valencia added.
