Silver (XAG/USD) Signals a Bullish Reversal and Exposes the 2014-High

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Silver is coming off a very strong day during the 6/19 session, ripping a rally from 19.50 to 20.90. The rally came on the back of broad USD-weakness, which followed the FOMC even risk on Wednesday (6/18). As we begin the 6/20 session, silver is holding under 20.90, but the damage is done, and the rally is giving us a bullish signal.
silver 6/20 daily chart
(silver (xagusd) daily chart, 6/20)
Here are a few signs of a bullish reversal, and what clues might add to this case:
1) The rally broke a falling trendline that connects the Sept. 2013 high of 25.12 with the 2014 high at 22.17.
2) Price action also cleared 20 and some common resistance pivots around there. If price pulls back, look for the 19.50-20 area for support. If the bullish reversal signal is true, price should stay north of this area.
3) Price is now trading above the 200-, 100-, and 50-day moving averages. Being able to hold above them after a pullback can add to the case of a bullish reversal.
4) The RSI in the daily chart broke above 70. This reflects the start of bullish momentum. IF the RSI holds above 40 after a subsequent pullback, the momentum is maintained.
silver 6/20/2014 4h chart
(silver 4H chart, 6/19)
The 4H chart shows a market that is building bullish momentum. However, with the RSI in both the 4H and daily chart above 70, we might want to wait for a pullback in price and momentum before considering another leg to this breakout. If price can eventually test and hold above 20, the upside risk has the 2014-high at 22.17 in sight.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.