I see a textbook correction playing out on the 4 hour chart of Silver!
Will the resistance continue to stand?
As you can see from the 4-hour chart below, the commodity’s price has made lower highs which are associated with a downward trend line.
Silver (XAG/USD) 4 hours Planned by TV
Now this resistance area has been holding since mid-May, so it may remain as a ceiling this time.
To top it off, the trend line coincides with a previous support area around $23.00, the 50% Fibonacci retracement level, and the 100 SMA dynamic inflection point.
Talk about confluence, huh?
The 100 SMA is below the 200 SMA to indicate that selling is more likely to resume than to reverse. This could be enough to bring silver back to the swing low of $22.13 or lower.
Additionally, Stochastic reflects overbought or overexhausted conditions among the buyers, so a return down would mean that the sellers are taking over.
I even see a bit of bearish divergence, the oscillator has posted lower highs and XAG/USD has posted higher highs.
The higher correction could reach 61.8% Fibonacci retracement at $23.45, but that could be the line in the sand for a bearish pullback.
Better keep tabs on overall market sentiment and high level US data such as the NFP release when trading this!