Silver Price Showing Signs of Reversal
Silver (XAG/USD) price is currently at a critical juncture, with indications that the short-term uptrend may be reversing, potentially leading to a move lower within its long-standing range that has been in place since April 2023.
Short-Term Trend Reversal
The 4-hour chart of silver is displaying warning signals of a possible trend reversal after a downturn on Thursday. The precious metal reversed its direction at the range highs and swiftly started descending, breaking below the last swing low of the previous uptrend at around $24.710.
Potential Reversal Confirmation
If XAG/USD continues to form lower peaks and troughs, confirming a lower low, it would strongly signal a reversal of the uptrend. Breaking below the swing low at $24.400 would provide further confirmation, potentially leading to a move back towards the range lows at approximately $22.000. Alternatively, the cluster of major moving averages in the lower $23.000s could act as a conservative target.
Technical Analysis
The daily chart also supports the negative outlook, with a Bearish Engulfing candlestick pattern forming recently. Additionally, the Moving Average Convergence/Divergence (MACD) indicator is on the verge of crossing below its signal line, adding weight to the bearish sentiment and potentially offering a sell signal within the range-bound market.
Potential Breakout Scenarios
A break back above the $25.770 highs could indicate a continuation of the uptrend, with the potential for further bullish momentum. In such a scenario, a target at $28.524 could be projected based on the range height extrapolation from the breakout point.
Silver versus the US Dollar: 4-hour chart
Silver versus US Dollar: Daily chart
Insight:
Adding technical analysis indicators such as the MACD can provide more depth to the understanding of potential market movements. It is important to consider multiple time frames to get a comprehensive view of market trends and potential reversal points. Keeping an eye on critical support and resistance levels can help traders make informed decisions based on price action.