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Silver 240 Minute Chart Analysis

With the psychological support level positioned at 23, the current price rests perilously close to this threshold, ready to move of to the next support level at the Fibonacci 38% retracement point of 22.286. We’re witnessing an interesting confluence, with volume accumulation coinciding with the 23 price level; a distinct marker highlighting the struggle between bullish and bearish sentiments.

Indeed, the market seems to be engaged in an intense test of this level, accentuated by the 50 and 200-day moving averages that underline a bearish climate. The RSI, currently entrenched in oversold territory, indicates the severity of the sell-off, yet the momentum indicator stubbornly stays bearish, hinting at further possible downside. The volume area low as per the volume profile suggests that market players are yet to reach a consensus, further complicated by the pullback from the trendline resistance at 22.645. This indicates the potential emergence of a short-term bullish sentiment, but it needs to be tempered with caution in light of the longer-term bearish trend. Silver has depreciated by a substantial -13.4% from the peak in May 2023, corresponding to a drop of almost -3.5$.

To add another layer of complexity, global macroeconomic conditions influence the trajectory of silver prices. Short-term futures traders have driven prices downward due to a combination of profit-taking and weak long liquidation, resulting in a sharp selloff. In addition, an exhaustive bullish momentum has surrendered to factors such as global economic uncertainty, the ongoing debt ceiling debate in the U.S., a looming default deadline, and a potential banking crisis. Not to mention the surge in the U.S. dollar momentum, which also put downward pressure on silver prices, as it led to profit-taking by firms previously short on the dollar.

Recession fears are another significant factor causing silver to significantly underperform gold. Given that more than 50% of silver demand originates from industrial applications, any signs of global economic weakness could notably impact silver demand. If the U.S. does enter a recession, it will likely exacerbate this effect. Lastly, disappointing economic data out of China, leading to a severe breakdown in copper prices, might be casting a gloomy shadow over silver prices, owing to the established correlations between different commodities.

Despite these bearish factors, a potential short-term correction could be on the horizon. The price could test the 50 MA resistance at the 23.340 level before descending further. However, any bullish movement could merely be a corrective response in light of the RSI trend. Still, with the enduring Fibonacci and volume confluences, the market seems poised for 3 possible moves, one is a short-term bullish move, or a strong downtrend, or a range between the 23.760 resistance at the 61.8% Fibonacci level and the 23 level at the 50% Fibonacci level. All these factors require a cautious and analytical approach, looking for both macro and technical clues, to navigate the silver market in May effectively.