What to Know
- Crude oil is holding above the 200-day EMA and attempting a recovery.
- Middle East tensions remain a key driver for oil price volatility.
- Silver remains under pressure after a bearish death cross formed.
- The $60 level has shifted from support to a key resistance zone for silver.
- Traders continue to monitor interest rates, the U.S. dollar, and global supply risks.
The backdrop right now is one of a lot of elevated rates around the world, and despite the fact that things have calmed down a little bit in the Middle East, tension still remains high. And really wouldn't take much to get things to turn around, and that obviously would have a major influence on what happens next.
The overall attitude of the markets is one of a little bit of hesitation and concern, I suspect. And with that being the case, the market is likely to continue to be one of choppiness and one of erratic moves from time to time. So capital preservation, although it's always your biggest concern, is even more paramount now.
Crude Oil
The light sweet crude market initially fell on Tuesday, but it looks like it's getting a little bit of support here just above the 200-day EMA. By doing so, it's bouncing and forming a bit of a potential hammer, and a break above the 50-day EMA could invariably signal that we are getting ready to recover pretty quickly. I think at this point we are more likely than not going to remain at the mercy of the latest Middle Eastern headlines because obviously the supply disruption coming out of Hormuz could be a major factor.
Silver
In the silver market, we've seen some downward pressure here as of late. And what I find interesting is that we've recently had the so-called death cross with the 50-day EMA breaking below the 200-day EMA. And despite the fact that interest rates dropped a bit during the session on Tuesday, we've seen silver drop right along with it.
That being said, over the longer term, I think you have to look at this as a market that continues to be noisy, choppy, worried about the value of the US dollar, worried about supply coming through the Strait of Hormuz when it comes to just about anything, let alone silver, and the economic damage that could be done because silver of course is in high demand due to the electrification of the economy. But if the economy's going to crumble based on energy problems, then it's almost like a feedback loop. It is worth noting that the $60 level offering resistance all of a sudden instead of being a magnet for price is something to keep an eye on.
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