- The price of Silver has reached a new May high following the release of US data.
- Silver is overbought on the 4-hour chart and is in the process of pulling back.
- It could correct lower, but the overall uptrend suggests it will recover and continue rising.
The price of the Silver (XAG/USD) has risen to a new May high of $29.20 following the release of US data.
Silver is in a short-term uptrend but has become overbought according to the RSI momentum indicator. Furthermore, the RSI presents a bearish divergence from the price.
4 hour chart
A bearish divergence occurs when the price reaches a new high but the RSI does not follow it, as occurred between May 10 and 15. It is a bearish signal.
The price is retracing on the current bar and it looks like it could be forming a bearish Shooting Star candlestick pattern. If such a pattern is confirmed at the close and is followed by another bearish bar, the Shooting Star will gain relevance and denote a bearish reversal. short term.
When taken in conjunction with the RSI indications, it could be indicating Silver is about to undergo a correction – a lot depends on how the current and following bars develop.
However, the short-term bullish trend should reaffirm and Silver should rise. A break above the day's high at $29.20 could provide further confirmation of further upside to the next resistance level around $30.00.
A decisive break below $27.97 would call the short-term uptrend into question.
A decisive breakout would be accompanied by a long Japanese candle that closed near its lows or three consecutive red candles.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
