Silver edged lower on Thursday and erased a serious a part of the previous day’s gains to weekly tops.
The formation of a rectangle on short-term charts points to indecision over the near-term direction.
Mixed technical indicators on hourly/daily charts warrant some caution before placing aggressive bets.
Silver extended the previous day’s rejection slide from the $28.00 mark, or weekly tops and witnessed some selling through the primary half the trading action on Thursday. The commodity was last seen trading round the $27.70-65 region, down over 0.30% for the day.
From a technical perspective, the XAG/USD has been oscillating during a narrow band since the start of in the week . The range-bound price action constitutes the formation of a rectangle, which points to indecision amid traders over subsequent leg of a directional move.
The top end of the mentioned trading range coincides with an ascending trend-line support breakpoint – extending from YTD lows touched in March. Repeated failures near the mentioned support-turned-resistance support prospects for further near-term downfall.
The negative outlook is reinforced by the very fact that technical indicators on hourly charts have again started drifting into bearish territory. That said, oscillators on the daily chart – though are losing positive momentum – are yet to verify a bearish bias.
Hence, any subsequent decline might still find decent support near the $27.00 mark and remain limited. Bearish traders are more likely to attend for sustained weakness below the said handle before positioning for any meaningful depreciating move.
The next relevant support is pegged near the $26.60 horizontal zone. Some follow-through selling has the potential to tug the XAG/USD further towards the $26.00 mark en-route the vital 200-day SMA support, currently near the $25.75-70 region.