Silver is trading flat near $38.00 during Monday’s European session, affected by an improving global risk sentiment. Last Friday, the price fell below the $38.70 support, invalidating a bullish cup and handle pattern on the 4-hour chart.

Technical indicators show that bearish momentum is strong. The RSI hovers near oversold levels at 32.00, and the ADX is at 36.86, suggesting further downside potential.

Support and Resistance Levels

The spot price is below the 50-period EMA at $38.49 and is testing the 100-period EMA near $38.03. Immediate support is at $38.00, with the next level at $37.50.

In a broader view, Silver remains bullish, contained within a rising price channel since April. The metal is above the 21-day EMA at $37.78 and the 50-day EMA at $36.45, indicating medium-term buying interest.

A drop below $37.50 may lead to a deeper retreat towards the $36.40-$36.00 range. Conversely, a move above $38.50 could revive bullish momentum, potentially retesting $39.53.

Silver prices are influenced by geopolitical events, industrial demand, and the US Dollar’s strength. Silver is often viewed as a safe-haven asset, similar to Gold, and its prices typically follow Gold’s movements.

Trading Recommendations and Strategies

Given the bearish momentum on the short-term chart, we believe traders should be cautious of further downside. This weakness is amplified by a strengthening US Dollar, with the DXY index recently climbing above 105.5, which typically pressures commodity prices. The immediate test of the $38.00 level will be critical in the coming days.

For those anticipating further decline, we think initiating short positions or buying put options is a viable strategy if the price cannot hold its current ground. A decisive break below the $37.50 support would be a key trigger for this approach, with a potential target in the $36.40 to $36.00 range. Historically, when such short-term patterns invalidate, a swift retest of lower support zones often follows.

Despite the current dip, we recognize the underlying strength within the rising price channel from April, which is supported by robust industrial demand. Projections from The Silver Institute indicate a record for industrial use in 2024, with solar panel manufacturing being a primary driver. This fundamental backdrop suggests the current pullback could be a buying opportunity for medium-term traders.

We would advise traders looking for upside to await a confirmed move back above $38.50 before entering long positions or purchasing call options. This would signal a revival of bullish momentum and show that the immediate selling pressure has been absorbed. A recapture of this level could pave the way for a retest of the recent high near $39.53.

The conflict between short-term bearish signals and medium-term bullish fundamentals suggests a period of heightened volatility. This environment may favor options strategies like straddles, which profit from large price moves in either direction. Such strategies can be effective as silver historically exhibits greater price swings than gold.

We are also watching the asset’s relationship with its sister metal, as its price often follows the yellow metal’s lead. The gold-to-silver ratio recently traded near 78, which is above its 20-year average. This indicates to some that silver may be undervalued and has room to outperform in a precious metals rally.

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