Silver bears taking over at a 50% mean reversion level
- Silver extends the downside following daily doji.
- Fed's hawkishness lifts the US dollar ad weighs on commodities.
The price is the white metal is pressured on Thursday following overnight sessions that saw a high of $28.23 before silver fell to a low of $27.37 as the US dollar firmed on hawkish FOMC minutes.
The dollar broke a four-day losing streak and jumped off a multi-month low following the release of the minutes where a number of members of the Committee said that should the economic recovery continue to gain momentum, it would be appropriate "at some point" to discuss tightening its accommodative policy, giving the greenback a boost.
A risk-off wave across markets saw heavy selling among commodities.
''Inflationary fears, a stronger USD and higher bond yields all conspired to weigh on investor appetite. The ANZ Commodity Index ended the torrid session down 1.3%. Industrial metals led the complex lower, with copper falling sharply,'' analysts at ANZ bak explained.
Meanwhile, cryptocurrencies have taken the spotlight, plunging in the wake of regulatory moves from China, which may have added some support to the precious metals markets.
Bitcoin dropped like a stone to its lowest level since January and it has now retraced a 61.8% Fibonacci of the bulk of the 2020-YTD rally. This new sell-off occurred in the wake of China's decision to ban financial and payment institutions from providing digital currency services.
Silver technical analysis
Technically, the price of silver had formed a doji on the daily charts.
The price has already been rejected to the downside as a consequence.
The drop is a 61.8% Fibo retracement and is now stalling at the 50% mean reversion level that has a confluence with the prior highs.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
