XAG/USD fell sharply on Friday following the better-than-expected US employment data for July. Today, the metal opened with a large negative gap below 23.70, but recovered a decent portion of today’s slide during the Asian session today, returning back above 23.70.
Overall, the metal continues to trade below the prior upside support line drawn from the low of Nov. 30, and thus, we would still see a negative near-term outlook, even if the price continues to recover for a while more.
As we already noted, the recovery may continue for a while more, perhaps for the metal to once again challenge the territory near 25.55. If the bears decide to jump back into the action from near that zone, we could see another fall below 23.70. This time, the break below 23.70 may open the way towards the 21.80 barrier, which is near the lows of Sept. 24 and Nov. 30. If that level doesn’t hold and breaks, then we could see the fall extending towards the 19.50 level, defined as a support by the inside swing high of July 15.
Shifting attention to our daily oscillators, we see that the RSI moved lower and just touched its toe below its 30 line, while the MACD, already slightly negative, has just crossed below its trigger line. Both indicators detect downside speed, confirming our view that another round of selling may be possible soon.
On the upside, we would like to see a recovery above 28.40, which provided resistance between May 18 and June 11, before we start examining whether the bulls have gained full control. This could also confirm the break above the downside resistance line drawn from the high of Feb. 1, and may see scope for extensions towards that high, at around 30.05. Another break, above 30.05, could take the white metal into territories last seen in the beginning of 2013, with the next territory to consider as a resistance being the high of Jan. 20, at around 32.50.
XAG/USD Silver daily chart technical analysis