XAG/USD fell sharply yesterday, breaking below the 26.00 zone, which acted as a strong support, and the lower bound of a sideways range that contained the price action since August 13th. Subsequently, the metal fell below the 25.00 zone, hit support slightly above 23.35, which is the low of August 11th, but the recovery stayed short-lived. The price hit resistance slightly above the 25.05 zone and retreated again. Having all this in mind, as well as that silver is trading below all three of our moving averages on the 4-hour chart, we would consider the short-term outlook to have turned negative.
If the bears are willing to stay in the driver’s seat, we could see them aiming for the 23.35 hurdle soon, the break of which may trigger extensions towards the low of July 28th, at 22.30. If that barrier is not able to halt the slide either, then its break may encourage the bears to dive towards the 21.35 territory, defined as a support by the low of July 22nd.
Shifting attention to our short-term oscillators, we see that the RSI stands below 30 and points down, while the MACD lies below both its zero and trigger lines, pointing south as well. Both indicators detect strong downside speed and support the notion for some more declines in silver.
Now, in order to abandon the bearish case, we would like to see a strong rebound back above 26.00. Such a move may signal the metal’s return within the previously-discussed range and may encourage advances towards the 27.45 zone, which provided decent resistance between September 10th and 16th. If there are no sellers around there this time around, a break higher may set the stage for advances towards the upper end of the range, at around 28.85.
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