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XAG / USD bounces away from monthly lows, remains vulnerable

  • Silver continued its recent downward trajectory and updated monthly lows on Monday.
  • Slightly oversold RSI on the 1 hour chart helped cap any further losses, for the time being.

Silver extended its recent retracement drop from the $ 24.80-85 zone and witnessed some follow-up selling on the first day of a new trading week. This marked the fifth day of a negative move in the previous six and dragged the white metal to new monthly lows, around the $ 23.40-35 region during the early days of the American session.

Expectations of an imminent Fed announcement later this year pushed the US dollar to two-week highs and weighed on dollar-denominated commodities, including silver.

Apart from this, a sustained break below the $ 23.80-75 horizontal support was seen as a key trigger for bearish traders and further contributed to the downward trajectory.

Meanwhile, RSI (14) on the 1 hour chart is already swinging oversold conditions and helped XAG / USD find some support near the August 27 lows around the $ 23.35 region. This should now act as a key turning point for short-term traders, which if decisively broken will set the stage for a further short-term depreciation move.

The next relevant support is set near $ 23.00. If XAG / USD dips below such support, there is ample chance of a test of yearly lows, around the $ 22.20-15 zone touched on August 8.

On the other hand, any attempt at a recovery move could now face immediate resistance near the $ 23.75-80 support breakpoint. This is followed by $ 24.00. Some follow-up buying could trigger a short hedging move and push XAG / USD past the intermediate resistance of $ 24.40, towards monthly highs, around the $ 24.85 region.

4-hour XAG / USD chart

Technical levels

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