Silver Holds Position, Bulls Take a Break!
Silver (XAG/USD) is seen consolidating the previous day’s strong gains to the highest level since February 2012 and oscillated in a narrow range during the Asian session on Wednesday. The white metal is currently trading just above the $37.00 round-figure mark and seems poised to extend its recent uptrend from April monthly swing lows.
From a technical perspective, the overnight breakout through a short-term descending trend-channel, which constitutes the formation of a bullish flag pattern, and the subsequent move up validates the constructive outlook. However, a slightly overbought Relative Strength Index (RSI) on the daily chart warrants some caution. Hence, it would be prudent to wait for some near-term consolidation or a modest pullback before placing fresh bullish bets around XAG/USD and positioning for further gains.
That said, any correction is more likely to attract fresh buyers and remain confined near the rising channel resistance breakout point, around the $36.90-$36.85 region. However, a convincing break below the last might prompt some technical selling and drag XAG/USD further towards the $36.40-$36.35 horizontal support en-route the sub-$36.00 level, or weekly lows. The latter should act as a key pivot point, which if broken could pave the way for some meaningful decline in the near-term.
Source: FXStreet
