Precious metals have been experiencing sharp fluctuations as the market mood continues to change these days.
What’s next for silver as it prepares to test the previous support area?
Silver (XAG/USD) Daily Chart by TradingView
Risk-on flows since early last week have kept silver below the $30,000 support area, which could turn this area into resistance next.
The Fibonacci retracement tool on the latest decline on the daily chart shows that this coincides with the 50% level, as well as the pivot point ($29.096). Looking back, this area has been resistance since April.
Will it hold up as a roof again this time?
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on silver and market sentiment, it’s time to check out the economic calendar and stay up to date with daily fundamental news!
The 100 SMA is above the 200 SMA suggesting that the bullish momentum is still there, and the gap between the moving averages is widening to reflect a strong bullish sentiment. Keep an eye out for a move above the 61.8% Fibonacci retracement level, as this could mean that silver bulls are ready to continue their assault to the resistance level at R1 ($31.404) near the year’s highs.
On the other hand, if the area of interest remains resistance, watch out for a potential drop back to the low near S1 ($26,957) or even the next level at S2 ($24,909).
Just make sure to keep a close eye on market headlines that may affect overall risk sentiment when trading commodities!