Watch out, silver bulls!
Precious metals have been rallying lately, but it looks like the rallies may be running out of steam.
Is XAG/USD selling soon? Here are the levels to keep tabs on.
Silver (XAG/USD) 1 hour chart by TradingView
Silver formed higher lows connected to an upward trend line that has been holding since late March, and the price is currently testing this support area.
A bounce could take XAG/USD back to highs around $26.00, but a breakout lower could indicate that a downtrend is on its way.
Now this goes along with the area of interest, which means buyers and sellers are often competing here. Technical indicators are giving mixed signals as to which side might win.
The 100 SMA remains above the 200 SMA to indicate bullish momentum, so there is a good chance that the trend line could keep losses in check.
Then again, the gap between the moving averages is narrowing to indicate a slowing bullish pressure and a possible bearish cross. The commodity is trading below both indices, so these levels could prove as dynamic resistance levels.
Also, the stochastic is starting to drop from the overbought area, so silver prices could follow suit as selling pressure builds up.
A break down below the $25.00 level would create a complex head and shoulders pattern as well, giving more reasons for sellers to get involved.
Better watch for risk aversion flows which could trigger a sell-off in risky assets such as silver!
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