XAG/USD has been in a recovery mode since Tuesday, when it hit the upside support line drawn from the low of December 11th. Today, the metal poked its nose above the 18.03 barrier, marked by Wednesday’s and Thursday’s highs, which combined with the fact that it continues to trade above the aforementioned upside line, suggests that further recovery may be in the works.
However, in order to get more confident on that front, we would like to see a decisive break above the 18.15 zone, defined as a resistance by the high of January 10th. This could wake up more bulls, who could drive the battle higher and conquer the 18.50 zone, marked by the high of January 6th. They could take a break after hitting that zone, thereby allowing the price to pull back. Nonetheless, as long as the white metal would stay above the upside line, we would see decent chances for the bulls to recharge and aim for another test near 18.50. If they manage to bypass that zone this time around, we could see extensions towards the peak of January 8th, at around 18.85.
Taking a look at our short-term oscillators, we see that the RSI rebounded from near its 50 line and now looks to be heading toward 70, while the MACD, already above its trigger line, has just turned positive. These indicators suggest that silver has started picking up upside speed and support the notion for some more advances.
On the downside, we would like to see a clear dip below the 17.87 barrier before we start examining whether the bears have gained the upper hand. Such a dip may also bring the rate below the pre-mentioned upside line and could initially aim for the 17.67 area, defined by the low of January 14th. Another break, below 17.67, may carry larger bearish extensions, perhaps setting the stage for declines towards the 17.30 area, marked as a support by the inside swing high of December 4th.
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