Silver / U.S. DollarShort
Spot Silver (XAG/USD) Echoing a Bearish Vibe
It was another positive week for spot silver. In dollar terms, the precious metal rallied +1.4% and notched up a second week in the green.
Is this surprising? No.
Will the bulls remain in control in the medium term? Unlikely, according to technical studies.
You will acknowledge that price action rebounded from support on the weekly timeframe at $22.42. However, although the weekly scale has been trending higher since August 2022, the rebound from support does not inspire confidence. We have barely made a mark on the -7.3% drop in June. Unless buyers change gears here, consuming $22.42 could be on the table, a move that would expose weekly support coming in at $20.82.
Interestingly, occupying the daily chart is a potential bearish pennant pattern between $22.11 and $23.10. In fact, this pattern, which tends to be viewed as a bearish continuation signal, represents the 2-week reaction seen from the weekly support mentioned above at $22.42. Adding to the bearish cloud brewing over this market is the daily Relative Strength Index (RSI) closing in on the underside of the 50.00 centreline (this area often holds as [indicator] resistance). A breakout beneath the pennant pattern’s lower boundary this week will likely stimulate follow-through selling and unearth a harmonic bat pattern’s potential reversal zone (PRZ) between $20.13 and $20.84.
Against the bigger picture, short-term price action out of the H1 chart travelled beyond $23.00 on Friday and cast light on resistance between $23.42 and $23.25, comprising three individual resistance levels. This could be the line in the sand for bears, as the above-noted resistance zone converges closely with the upper border of the daily timeframe’s pennant pattern. Therefore, $23.42-$23.25 is an area worthy of the watchlist this week and might be a zone that sellers welcome, particularly as the H1 timeframe’s RSI indicator also explores overbought space.
Is this surprising? No.
Will the bulls remain in control in the medium term? Unlikely, according to technical studies.
You will acknowledge that price action rebounded from support on the weekly timeframe at $22.42. However, although the weekly scale has been trending higher since August 2022, the rebound from support does not inspire confidence. We have barely made a mark on the -7.3% drop in June. Unless buyers change gears here, consuming $22.42 could be on the table, a move that would expose weekly support coming in at $20.82.
Interestingly, occupying the daily chart is a potential bearish pennant pattern between $22.11 and $23.10. In fact, this pattern, which tends to be viewed as a bearish continuation signal, represents the 2-week reaction seen from the weekly support mentioned above at $22.42. Adding to the bearish cloud brewing over this market is the daily Relative Strength Index (RSI) closing in on the underside of the 50.00 centreline (this area often holds as [indicator] resistance). A breakout beneath the pennant pattern’s lower boundary this week will likely stimulate follow-through selling and unearth a harmonic bat pattern’s potential reversal zone (PRZ) between $20.13 and $20.84.
Against the bigger picture, short-term price action out of the H1 chart travelled beyond $23.00 on Friday and cast light on resistance between $23.42 and $23.25, comprising three individual resistance levels. This could be the line in the sand for bears, as the above-noted resistance zone converges closely with the upper border of the daily timeframe’s pennant pattern. Therefore, $23.42-$23.25 is an area worthy of the watchlist this week and might be a zone that sellers welcome, particularly as the H1 timeframe’s RSI indicator also explores overbought space.
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