XAG/USD traded higher on Tuesday, but hit resistance near the 24.30 level and then, it retreated somewhat. Overall, the white metal has been trading in a trendless mode since December 1st, with most of the price action being contained between the 23.50 and 24.30 levels. Thus, for now, we will adopt a neutral stance.
In order to start examining the bullish case, we would like to see the price breaking above the upper end of the aforementioned range, at 24.30. Such a move may initially target the 24.85 zone, or the 25.05 barrier, marked by the peaks of December 8th and November 16th respectively. If the buyers are not willing to stop there, a break higher may extend the advance towards the high of October 12th, at 25.55.
Looking at our short-term oscillators, we see that the RSI moved back above its 50 line, but has just ticked down, while the MACD, although above its trigger line, lies fractionally below zero. Both indicators suggest that silver may start gathering upside speed soon, but the fact that the RSI turned down and that the MACD is still negative confirms our view to wait for a break above 24.30 before getting confident on that front.
On the downside, a dip below 23.50 may be needed in order to wake up the bears. This will confirm a forthcoming lower low on both the 4-hour and daily charts and may see scope for declines towards the low of November 24th, at 22.90. Another break, below 22.90, could set the stage for larger bearish extensions, perhaps towards the 22.00 area, slightly above the low of November 30th.
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