Silver (XAG/USD) has been bullish since finding a price bottom above 18.65 to start June. Since price reached 21, traders have been trading silver sideways, oscillating below and above this sticky price.
During this consolidation, you saw continuing higher-highs, and higher-lows, reflecting the bullish bias. However, the extended bearish bias with the 4H RSI reflects the loss of strong bullish momentum. The 4H RSI also was just at 40 and held above this level. After being above to push above 80, the ability to hold above 40 shows maintenance of bullish momentum in this time-frame. Price is also approaching a rising trendline from early June. Silver looks ready for a bullish continuation. If price can push to a new high this week, and bring the 4H RSI above a falling line, silver would likely be in bullish continuation.
However, if price fails to push above last week’s high of 21.28, and falls below 20.80 along with June’s rising trendline, then we are likely in a bearish correction, with the 20.00 handle first in sight.
The daily chart shows that if there is indeed a bearish correction, the area around 20 has been a previous resistance and should provide at least some short-term support. But this scenario would have put a significant price top around 21.25, which is lower than the one near 22.00. Since we just made a fresh 2014 low in June, the appearance of a lower high will shift June’s bullish outlook back to a bearish-neutral outlook for 2014.
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