- The sell off on GameStop led the XAG / USD bounce, which fades above the $ 27 level.
- Silver is heading lower again, amid a bearish crossover and probably a bearish flag on the 1 hour chart.
- The XAG / USD is targeting the 200 hourly SMA, while the RSI remains below the midline.
Silver (XAG / USD) has halted its recovery move from the day before the start of the European session on Wednesday, as the bulls are struggling to find acceptance above the $ 27 level.
XAG / USD sellers have made a comeback, despite a widespread pullback in the US dollar, as the white metal rebound led by the GameStop (GME) sell off appears to have faded.
Shares in GameStop collapsed 60% on Tuesday, as the short squeeze induced by retail investors appeared to be coming to an end.
Additional downward pressure on silver comes from the 18% increase in the maintenance margin on the Chicago Mercantile Exchange (CME) announced early Monday.
From a short-term technical perspective, Tuesday’s drop in silver after a small bounce has formed a bearish flag on the 1-hour chart, with a close below the uptrend line support at $ 26.77 that would validate a break to the downside.
A breakout of the bearish flag would open the doors for a retest of the critical support around $ 26.30, where we see the convergence of Tuesday’s low and the 200 hourly horizontal moving average.
If sellers find acceptance below that level, a test of the $ 25 level could be in play. The downside bias is supported by a bearish crossover of the 21-hour SMA and the 100-hour SMA.
Also, the RSI is pointing down below the midline, which leaves room for further declines.
On the other hand, buyers should find acceptance above the $ 27.20 / 30 zone, which is the confluence of the 100 hourly SMA and uptrend resistance, to reignite the recovery momentum.
The next line of defense for the XAG / USD bears is seen at the horizontal region of $ 27.85. Higher up, the bearishly sloping 50 hourly SMA at $ 28.10 could challenge the bulls’ commitment.
Silver 1 hour chart
Silver technical levels
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