Silver's return to growth is delayed

Silver quotations came under strong pressure from sellers yesterday. The drop exceeded 2.5% at some points on Tuesday trading, and the price fell below 24.6 for the first time since April 4. Most of the drawdown was redeemed by the end of the trading session, but today the market is mainly negative again. Highly likely we might see the bears attacking the 24.6 level once again.

Yesterday silver, unlike gold, didn't manage to keep stability during the active growth of the dollar index. After all, silver, as compared to yellow metal, has a much greater demand in industry, and therefore the evidence of a deteriorating economy doesn’t contribute to price growth. 

Joy Young, one of the heads of the research company MarketVector Indexes, expects a further decline in industry and U.S. GDP. Meanwhile, anxiety in the banking sector is growing amid an announcement by First Republic Bank that it will reduce deposits by $100 billion between January and March 2023. Meanwhile, problems in the banking sector may be revealed gradually. In 2008, several months passed between the bankruptcy of Bear Stearns and Lehman Brothers.

Market participants are still keeping an eye on coming statistics which may confirm or deny the opinion that the global economy is worsening. Today, the data on durable goods orders in the USA will be such an indicator. Demand for such goods is expected to grow 0.7% after a 1% decline a month earlier. If the actual data prove to be worse than expected, silver may continue its downward trajectory.

The RSI is gradually declining, but it is still far from the oversold zone, which means that silver has no technical obstacle to reaching the 23.6% Fibonacci level (level 24.6). In case this level is broken through, the way to 23.7 will open.

We may offer you the following option of trading strategy: 

Sell silver near 25. Take profit – 24.6. Stop-loss – 25.4.

Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.