- Silver saw further sales on Thursday and erased the modest gains from the previous day.
- The price action related to the range forms a rectangle on the short term charts.
- Mixed technical indicators on hourly / daily charts warrant some caution for aggressive traders.
Silver failed to capitalize on the positive move from the previous day, instead it took on further selling pressure on Thursday. The drop dragged commodity into the $ 27.75 area, again closer to weekly lows during the first half of the European session.
From a technical standpoint, XAG / USD – with the exception of a few instinctive peaks – has hovered in a familiar trading band for the past three weeks or so. The price action related to the range forms a rectangle, indicating indecision among traders.
Meanwhile, technical indicators on hourly charts gained some negative momentum. That said, the bullish oscillators on the daily chart support the outlook for some bearish buying to emerge to lower levels and warrant the caution of aggressive bearish traders.
Therefore, any further fall could still be seen as a buying opportunity close to the $ 27.60- $ 55 region. This should help limit the decline near the support of the trading range, around the $ 27.35-30 region, which, if broken decisively, could leave XAG / USD vulnerable to further decline.
The next relevant support is near the $ 27.00 mark, below which XAG / USD may accelerate the fall to the horizontal level of $ 26.45. The downtrend could extend towards the $ 26.00 mark en route to the all-important 200-day SMA, around the $ 25.70 area.
On the other hand, the $ 28.00 figure now appears to act as immediate resistance past the strong barrier of $ 28.25-30. This is followed by resistance near the $ 28.55 region, or weekly highs and monthly highs for May, around the $ 28.75 region.
Bulls might wait for a sustained move past the mentioned hurdles before positioning themselves for any further move of appreciation. XAG / USD could then break through the $ 29.00 mark and the intermediate resistance of $ 29.40- $ 50 and aim to recover the key psychological mark of $ 30.00.