XAG/USD has been in a free fall mode since April 18th, when it hit resistance slightly above the 25.85 zone, marked by the high of March 24th. On Friday, the metal fell below the upside support line drawn from the low of December 15th, and although stopped temporarily near the 22.15 zone, it seems that further declines may be possible.
A clear and decisive break below 22.15, which supported the price action between January 6th and February 4th, could extend the current fall towards the 21.40 zone, which provided decent support on September 29th and 30th, as well as on December 15th. If the bears are not willing to stop there either, then we may see them pushing towards the 19.48 area, marked by the inside swing high of July 15th.
Taking a look at our short-term oscillators, we see that the RSI fell below 30, and keeps pointing down, while the MACD lies below both its zero and trigger lines. Both indicators detect strong negative momentum and support the case for further declines.
On the upside, we would like to see a clear rebound back above the 24.15 zone, which acted as strong support between March 29th and April 6th, before we start examining whether the bulls have stolen the bears’ swords. Such a move could encourage advances towards the 25.85 zone, the break of which could trigger extensions towards the peak of March 8th, at 26.93.
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