Are my eyes deceiving me or am I seeing early signs of a triangle breakout on silver?
As you can see from the chart below, the precious metal is already inching above a key resistance zone.
Here are the levels I’m watching on the 4-hour time frame.
Silver (XAG/USD) 4-hour Chart by TradingView
Okay, so it’s not exactly a “perfect” descending triangle pattern on silver… but check out how price is climbing out of consolidation and above the falling trend line around $23.00!
Does this mean that an uptrend of the same height as the triangle pattern is in the works?
Safe-haven flows have picked up earlier this week, as market players are on edge ahead of another batch of central bank decisions and inflation updates.
After all, a rebound in price pressures from supply chain risks plus stubbornly hawkish policy biases might drive up expectations of higher borrowing costs and therefore fears of slower global growth.
Gold has already been picking up on these risk-off vibes, which suggest that silver and other shiny metals might follow in its footsteps.
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 silver and risk sentiment, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
XAG/USD is closing in on R1 ($23.241) and might be able to keep up its climb to R2 ($23.682). A sustained break above this could clear the way for a move to the next bullish targets all the way up to R5 ($25.652) that lines up with the December highs.
Technical indicators are painting a different picture, though, as the 100 SMA is still below the 200 SMA while Stochastic is indicating overbought conditions. Turning lower would signal that bearish momentum might return and take silver back inside its consolidation pattern.
If this breakout proves to be a fake out, XAG/USD could sink back to the triangle bottom near the pivot point level ($22.584)
Whichever direction you end up trading, make sure to follow your own trading plan when you take your setups!
