Silver loses ground amid dollar strength and trade risks

Silver prices fell by 1.4% during the morning session on Monday. The main factor of the decline was strengthening of the US dollar amid growing concerns over the global trade confrontation caused by the massive tariffs of US President Donald Trump.

The U.S. dollar index hit a three-week-high, which made silver less accessible to foreign buyers. On Saturday, Trump announced 25% tariffs on Canadian and Mexican imports. He also warned of 10% tariffs on Chinese products starting on Tuesday. As emphasized in the White House, the decision does not allow any exceptions.

Canada and Mexico announced retaliatory measures, and China declared its intention to challenge the new tariffs at the World Trade Organization and take additional steps in response.

Markets remain concerned about the conflicts, but demand for safe-haven assets such as silver could limit a large drop in prices. 

This week, the ISM Manufacturing Activity Index, JOLTS Job Openings Index, Services Business Activity Index and Non-Farm Payrolls report will be released. The data will determine the future direction of silver.

From a technical point of view, on the four-hour timeframe (H4) silver quotes demonstrate the formation of an upward correction along the previously broken ascending channel of the daily timeframe, where its support now acts as trend resistance.

Within the wave analysis, the price is in the process of forming the second ascending wave on H4. However, the Relative Strength Index indicator (standard parameters) indicates the probability of reversal and the beginning of the third downward wave, as it has left the overbought zone.

Signal:

The short-term outlook for Silver suggests selling.

The target is at the level of 29.200.

Part of the profit should be taken near the level of 30.100.

A stop-loss could be placed at the level of 32.100.

The bearish trend is short-term, so a trading volume should not exceed 2% of your balance.