XAG/USD has been in a rally mode since yesterday, when it hit support at 14.73, slightly above the tentative upside support line drawn from the low of May 28th. What’s more, the surge brought the metal back above the psychological zone of 15.00. The latest rebound, combined with the fact that the price is trading above the prior downside resistance line drawn from the peak of March 21st, suggests that last week’s steep tumble was just a corrective phase and that further advances may be in the works, at least in the short run.
In our view, the break above the 15.00 barrier may have opened the way towards the 15.14 level, which is the high of June 7th. The bulls may decide to rest after achieving that goal, that way allowing the metal to correct a bit lower. That said, we expect such a potential retreat to stay limited above the aforementioned tentative upside line, perhaps even above 15.00. Something like that could encourage the bulls to take charge again and aim for another test near 15.14, the break of which would confirm a forthcoming higher high on the 4-hour and daily charts and perhaps set the stage for the 15.28 obstacle, defined by the peak of April 10th.
Shifting attention to our short-term oscillators, we see that the RSI edged north, crossed above 70, and still, continues to point up. The MACD, already above both its zero and trigger lines, points north as well. These indicators detect strong upside speed and corroborate our view for some further advances, at least towards the 15.14 level.
In order to start examining whether the bulls have abandoned the battlefield, we would like to see a clear dip below 14.84. Such a move would also bring the price below the tentative upside line drawn from the low of May 28th, and may initially pave the way towards 14.73, a support marked by yesterday’s low. Another break, below 14.73, could extend the slide towards the lows of June 10th and 11th, at around 14.65.
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