Uptrend acts as support for silver

09 January 2023 217
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For silver, 2023 began with the establishment of a new maximum from April at 24.54. However, then the initiative came into the hands of sellers, and over the next 3 days the price decreased by more than 5%. As a result, the bottom of the correction was found exactly on the uptrend line, which now passes close to the level of 23.2. The activity of “bulls”, which are seeking to bring quotes above 24 again, has resumed.


Silver currently receives the main support from two factors: the decline of the dollar and the growth of economic activity in China. In the case of the dollar, the incoming data does not yet give an unambiguous answer to the question about the prospects of the U.S. currency, but the news from China is mostly positive for silver.


China is the largest consumer of silver, so the acceleration of economic growth in this country will clearly benefit metal prices. After almost 3 years of strong COVID restrictions, it will take a lot of time to resume the normal functioning of the economy, but the most important thing is that it started already. In addition, Chinese officials express their readiness to help enterprises in case of possible problems.


It is is possible to get an idea of how fast the Chinese economy is recovering at the end of this week, when the statistics on inflation (on Thursday) and the trade balance (on Friday) will be released. Low rates of price growth and the expansion of China's trade with other countries may favorably affect silver quotes.


The U.S. inflation data will also be available on Thursday, which gives this day the status of a key one this week. Therefore, before the statistics are released, silver can be traded approximately at current levels in the range of 23.4-24. It is better to make purchases at the lower limit of this range (closer to the uptrend line), and the levels of 24.2 and 24.5 can be identified as growth targets.



The following trading strategy option can be suggested:


Buy silver when the price drops to the lower limit of the range 23.4-24. Take profit 1 – 24.2. Take profit 2 – 24.5. Stop loss – 23.2.


Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.

This content is for informational purposes only and is not intended to be investing advice.

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