Silver traded lower during the European morning Tuesday, after it hit resistance near the 16.80 barrier and the downside resistance line drawn from back at the peak of the 6th of February. Having that in mind, and also taking into account that the metal looks to be trading within a rising wedge formation, we believe that there is a decent likelihood for the bears to stay in charge for a while more.
That said, we would like to see the price breaking below the lower end of the wedge before we get confident on that front. A dip below 16.65 could confirm the case and could initially aim for our next support level of 16.53. Another break below 16.53 is likely to set the stage for larger bearish extensions, perhaps towards the 16.35 zone, defined by the low of the 22nd of March.
Looking at our short-term momentum studies, we see that the RSI turned down after it hit resistance near its 70 line, while the MACD, although above both its zero and trigger lines, shows signs of slowing down. These signs suggest that the latest recovery may have run out of steam and corroborate our view that the price may be poised to trade south in the short run.
On the upside, we would like to see a clear break above 16.80 before we assume that the latest recovery is not over yet, and that silver could trade north for a while more. Such a break could pave the way towards our next resistance zone of 16.95.
