Silver shifts from squeeze to swoon

• Silver slices through the 200DMA and August 2025 uptrend
• $64.10 back in focus ahead of the US inflation report
• Dollar strength and softer risk appetite continue to weigh
• Hot CPI could fuel another leg lower, but silver loves a bear trap

From Silver Squeeze to Silver Swoon

Earlier this year was all about the silver squeeze. Now comes the silver swoon, with the price slicing through a number of key supports over the past week. The latest to give way was the 200-day moving average, following an abrupt puke through the major uptrend that had been in place since August 2025.

The price now finds itself trading beneath $64.10, the low struck on February 6 at the tail end of the January-February rout. The only time that level has been tested since came in late March following another violent reversal, with the price initially trading beneath it before launching higher into the close. Given silver's history at $64.10, and the fact we have a major risk event later today in the form of the US inflation report for May, it presents as a decent level to build setups around.

Source: TradingView

To be clear, the message from RSI (14) and MACD is firmly bearish. The former is accelerating lower beneath 50 without being oversold, while MACD has already staged a bearish crossover and continues to diverge away from the signal line. Downside pressure is intensifying, favouring shorts over longs. And that's before you even consider the price action seen recently or the fact the price is now trading beneath each of its major medium and long-term moving averages, two of which are showing signs of curling lower. It just screams heavy.

But we know silver can turn around on a dime, reflecting the fact it's now right up there with the most volatile, readily traded risk assets you can find. Long gone are the days of it being a sleepy industrial metal or jewellery item living in the shadow of gold. It has morphed into a hyper-speculative trader's market.

The Bull and Bear Cases

As such, while the message from the technicals screams sell in search of more substantive mean reversion, I want to see how the price trades around the inflation print first. Should the details confirm or add to hawkish Fed pricing, which has been fuelling US dollar upside recently and hammering dollar-denominated commodities, a close beneath $64.10 would generate a decent entry level for shorts, allowing positions to be set with a tight stop above for protection. Initial downside targets include $58.85, $54.48, $49.30 and $46.00, with the first two coinciding with significant former bullish breakouts.

Should the latest lurch lower end up being a bear trap, with the price reversing back above $64.10 and closing there, the option is available to set countertrend longs looking initially for a retest of the 200DMA overhead, with former support at $70.90 another option should the move really get going. It's not the preferred setup given the technical picture, or my fundamental view that today's inflation report is unlikely to meaningfully curtail Fed hiking bets, but you can never say never with silver this year.

The Message From the Matrix

If you're wondering why silver has been getting hosed, the answer may lie in the company it's been keeping. Across the five, 20 and 60-day windows, silver has maintained a strong inverse relationship with the US dollar while exhibiting an unusually tight positive relationship with riskier assets such as global equities and S&P 500 futures. It also tends to struggle when volatility picks up, showing notable inverse relationships with both VIX futures and the MOVE Index.

Source: TradingView

More importantly, the recent moves in those drivers have aligned with the correlations. The dollar has strengthened, equities have softened and volatility has risen. Rather than behaving like a traditional precious metal, silver has increasingly traded like a high-beta expression of dollar weakness and risk appetite.

Fed Path in Focus

That's particularly relevant ahead of today's US inflation report. The shape of the Fed funds futures curve continues to imply a higher path for rates over the next year, helping to underpin recent dollar strength. If the inflation details add to the 39 basis points of hikes priced in, it would provide another tailwind for the greenback and another headwind for silver. If not, the conditions would be there for yet another violent reversal.

Source: TradingView