Silver prices have recently topped around 21.28 in July, and has been consolidating around the 21 handle for over 2 weeks now. Ahead of the FOMC meeting, XAG/USD looks ready for bullish continuation.
Looking at the 4H chart, bullish signs are still there.
1) The moving averages still indicate a bullish market
2) A rising trendline from June remains intact.
3) The RSI is held above 40. After pushign above 80, if the RSI reading can hold above 40 and push back above 60, it reflects maintenance and continuation of the bullish momentum since June.
A break below 20.80 would likely push silver back toward the 19.80-20 area. Here we see a previous resistance pivot and the 200-SMA in the 4H chart. The general trend since June would still be in play after this bearish correction, and we will have to wait for more clues to see whether traders are looking to revive the trend after the correction. When you look at the daily chart, you also see that this 19.80-20 area include a resistance area of a previous consolidation period.
A break above 21.30 however, opens up 2014-highs. 21.78 and 22.18 will be the next two resistance/targets for a bullish breakout.
FOMC: FOMC Meeting Minutes are due to be released during the 7/9 session. Most likely the bank will address the poor Q1 GDP, and re-assess Q2 GDP. It if is lower growth forecasts, it will likely have to consider pushing the rate hike outlook towards the latter half of 2015, instead of mid-year. This should help send silver above the recent consolidation.
A hawkish tone from the minutes can keep XAG/USD in consolidation, and if price does fall below 20.80, we are likely to see some short-term bearish correction toward 19.80-20 as mentioned above.