Silver prices have been under pressure in the early going of 2021, as strength in equities are taking precedence over safe haven commodities. Despite the recent weakness, the iShares Silver Trust (SLV) could be a value option at the current price.
Silver could get some fundamental help from a weaker dollar. The greenback recently retreated thanks to a surprise rise in U.S. weekly jobless claims.
“With the job market moving in the wrong direction, it underscored this week’s Fed minutes that emphasized how the economy was far from what the Fed considers to be healthy,” Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, said in a note, according to a CNBC report.
“Data that reinforces the Fed’s dovish stance is likely to keep Treasury yields and the dollar anchored,” he added.
Overall, SLV gives ETF investors:
- Exposure to the day-to-day movement of the price of silver bullion
- Convenient, cost-effective access to physical silver
- Use to diversify your portfolio and help protect against inflation
Silver’s Price Action Dictates the Next Move
FX Empire’s technical analysis noted that the $25 price mark will be one to watch. Silver’s high was on February 1 when it hit $27.98 before pulling back.
“Silver has once again faced resistance near $25.20 and pulled back towards the $25 level,” FX Empire said. “Currently, silver is trying to stay above this psychologically important level. If this attempt is successful, silver will get to another test of the resistance at $25.20.”
“The next resistance level is located at the 20 EMA (exponential moving average) at $25.30 so silver needs to get above the resistance area at $25.20 – $25.30 to have a chance to develop additional upside momentum,” FX Empire added. “If silver manages to settle above the 20 EMA, it will head towards the resistance at $25.55. A successful test of this level will open the way to the test of the resistance at the 50 EMA at $25.75.”
As for SLV, its 50-day moving average is still above the 200-day moving average, but for how long? When looking at the fund’s momentum, particularly the relative strength index (RSI), it’s sitting in the middle of overbought and oversold levels.
When applying a stochastic relative strength index (StochRSI) filter, SLV is within also overbought levels. Price-conscious investors might want to watch what it does with its support levels.
“On the support side, a move below the support at $25.00 will push silver towards the next support level which is located at $24.70,” FX Empire said further. “If silver declines below this level, it will head towards the next support at $24.50.”
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