XAG/USD traded lower yesterday and today, after it hit support at 23.00. The metal remains above the prior downside resistance line taken from the high of June 11th, and now, following yesterday’s rebound, we can draw a new short-term uptrend line taken from the low of September 29th. In our view, this keeps the short-term bias positive.
We believe that the buyers will stay interested and perhaps challenge the 24.87 zone again soon, which is marked as a resistance by the high of September 3rd and lies slightly above the peak of October 22nd. A break higher would confirm a forthcoming higher high and could open the path towards the high of August 4th, at 25.97, or the peak of July 6th, at 26.75. If neither territory is able to halt the advance, then a break higher could see scope for extensions towards the high of June 11th, at 28.22.
Shifting attention to our daily oscillators, we see that the RSI rebounded form near its 50 line, while the MACD, although below its trigger line, shows signs of bottoming within its positive territory. Both indicators suggest that the white metal has started gaining upside speed again, which supports the case for some more buying in the near term.
In order to start examining the bearish case, we would like to see a dip below 21.45, the low of September 29th. This will not only confirm silver’s return below both the aforementioned diagonal lines, but also a forthcoming lower low on the weekly chart. The bears may then get encouraged to push the battle down to the 19.48 area, marked by the inside swing high of July 15th, 2020, the break of which could allow extensions towards the lows of July 9th and 10th, 2020, at around 18.42.
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