Today, the precious metals are coming under severe selling pressure. The iShares Silver Trust (SLV) is trading lower by more than 6.0% to $21.40 a share. In early August, the SLV traded as high as $27.39 a share which was a multi-year high. In fact, at that time all of the precious metals were surging as the U.S. Dollar Index (DX) declined and the central banks around the world continued their easy money policies. Traders and investors should note that in early August the precious metals went parabolic on the charts and that is often followed by a sharp decline or retrace. So most experienced chartists are not surprised by today’s decline in silver and gold.
There are some important support levels coming up for the SLV that look attractive for a bounce opportunity. The first key support area that I see is around the $20.00 area. There is an important gap fill from July 21st, 2020 that should help SLV bounce at this level. So it will be important to see how SLV declines into this support area for a trade. Then the next major support level that I see on the charts would be around the $18.00 level. This is the prior break-out area from July 2020. Stocks and ETFs will usually be defended when they test past break-out levels. There is also a key retrace area around this level that makes this an even better support level for a long side trade. Keep these levels on the radar as I will be looking to trade the SLV around one of these important support areas.
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