Silver is hitting a long-term ceiling, placing it back in correction mode as it approaches a former resistance zone.
Will this hold as support?
Check out these inflection points I’m watching on the commodity’s 4-hour time frame.
Silver (XAG/USD) 4-hour Chart by TradingView
A return in dollar demand forced silver to retreat from its longer-term resistance around $25.75 and test nearby support zones.
A combination of risk-off flows and hopes that the FOMC can still push back on its easing plans seem to be propping up the safe-haven currency for the time being.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar and silver, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Price is now down to the 38.2% Fibonacci retracement level, which happens to coincide with the 100 SMA dynamic inflection point. A larger pullback could still reach the 50% Fib near S1 ($24.13) or even the 61.8% level that’s right in line with an ascending trend line, 200 SMA dynamic support, and an area of interest.
The 100 SMA is still safely above the 200 SMA to signal that support levels are more likely to hold than to break, so XAG/USD might soon make its way back up to the highs near R1 ($25.80) and beyond.
Stochastic is pointing down but is approaching the oversold region to signal exhaustion among sellers, so heading north could confirm that buyers are returning and ready to let the uptrend resume.
Just stay on the lookout for a break below the trend line and S2 ($22.75) since this might mean that a reversal is in order.
Good luck and good trading this one!