XAG/USD Technical Analysis

Is the silver market set to enter a bear market? Observe the reversal pattern that is developing during a 4-hour period!

Technical Analysis

Is the silver market set to enter a bear market?

Observe the reversal pattern that is developing during a 4-hour period!

Although the precious metal hasn't broken below the head and shoulders pattern's neckline, pay careful attention to this short-term support zone.

The stagflation combination of sluggish growth and intense pricing pressures was particularly underscored by the advanced U.S. GDP estimate, which was followed on Friday by an annual core PCE index that was higher than anticipated.

These led to a rocky start to this week and sent commodities, notably silver, down below near-term support zones.

At least as tall as the pattern, a break below the neckline of the head and shoulders reversal formation in XAG/USD might start a downturn.

Should that occur, expect a persistent downward shift towards the subsequent objectives at S1 ($26.365) in proximity to the 200 SMA dynamic support, S2 ($25.508) in proximity to a small psychological threshold, and S3 ($24.437) at the low points of April.

To reflect the upward trend, exercise caution while the 100 SMA remains above the 200 SMA. However, silver has dropped below the 100 SMA, which moves more quickly, providing an early warning that the trend is changing.

In the event that support continues to hold, XAG/USD may once again target the resistance areas at R1 ($28.383) and R2 ($29.544), which are close to the monthly highs.

Make sure you check out the many excellent catalysts from the US economy that have the potential to increase market volatility this week!

Robert Thompson

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