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XAG / USD with modest losses, remains above $ 27.50

  • Silver is moving lower on Thursday and returns a significant portion of the previous day’s gains to weekly highs.
  • The formation of a rectangle on the charts points to indecision about the short-term direction.
  • Mixed technical indicators on hourly / daily charts warrant some caution before opening aggressive positions.

Silver is extending the rejection drop the day before, from the 28.00 level at weekly highs, and is witnessing some selling during the first half of Thursday’s trading action. At the time of writing, the white metal is trading at 27.65, shedding 0.30% on the day.

From a technical perspective, the XAG / USD has been swinging within a tight range since the beginning of this week. Price action within the range constitutes the formation of a rectangle, which points to indecision among traders about the next directional move.

The upper end of the aforementioned range coincides with a support break point of an ascending trend line, which extends from the annual lows touched in March. Repeated failures near previous support now turned into resistance points to a further decline in the short term.

The negative outlook is reinforced by the fact that the technical indicators on the hourly charts have again started to move into bearish territory. That said, the oscillators on the daily chart, although they have been losing positive momentum, have yet to confirm a bearish bias.

Therefore, any subsequent decline could continue to find decent support near the $ 27.00 level and remain capped. Bears are more likely to wait for sustained weakness below that level before positioning for any significant bearish movement.

The next relevant support is near the horizontal zone of $ 26.60. Some continuation selling has the potential to drag XAG / USD towards the $ 26.00 level on its way to the very important support of the 200-day SMA, currently near the $ 25.75-70 region.

On the other hand, the $ 27.90-28.00 region now appears to have emerged as a strong immediate obstacle, closely followed by the $ 28.25-30 resistance zone. A sustained force above this region will negate the negative bias and push the XAG / USD towards monthly highs, around the $ 28.75 region.

Silver daily chart

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Silver technical levels

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