XAG / USD Consolidates Below Six-Week Highs

• The price of silver is consolidating its recent strong move to multi-week highs.
• The technical setup favors the bulls and supports the prospects for further gains.
• Any drop below the $ 24.00 level could be seen as a buying opportunity.

The price of silver (XAG / USD) now appears to have entered a bullish consolidation phase and ranges just below $ 24.50, at six-week highs hit early Thursday.

From a technical perspective, the previous day’s strong positive continuation move validated this week’s breakout of a downtrend line extending from the monthly highs in July. This follows the recent bullish breakout of the reverse shoulder-head-shoulder pattern and supports the prospects for additional short-term gains.

The constructive setup is bolstered by bullish technical indicators, which are still far from being in the overbought zone. That said, a slightly overbought RSI on the 4-hour chart was unable to help XAG / USD capitalize on its move beyond the 38.2% Fibonacci retracement of the $ 28.75-$ 21.42 dip, at least for now.

However, the bias remains firmly in favor of the bulls. Therefore, a further move towards a test of the September highs, around the $ 24.80-85 region, remains a clear possibility. The bulls could eventually aim to regain the key psychological level of $ 25.00, which coincides with the 50% Fibonacci retracement.

On the other hand, the $ 24.00 level now appears to defend the immediate drop. Any subsequent decline could be seen as a buying opportunity near the $ 23.75-70 region. This, in turn, should help limit the corrective pullback near the breakout point of the aforementioned trend line, around the $ 23.50-45 region.

Silver daily chart

Silver technical levels