Silver Price Forecast: XAG/USD holds steady above $37.00 as bulls pause for a breather

FXStreet
Updated
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  • Silver enters a bullish consolidation phase during the Asian session on Wednesday.

  • A slightly overbought daily RSI holds back the XAG/USD bulls from placing fresh bets.

  • Any corrective pullback might be seen as a buying opportunity and remain limited.

Silver (XAG/USD) is seen consolidating the previous day's strong gains to its highest level since February 2012 and oscillating in a narrow range during the Asian session on Wednesday. The white metal currently trades just above the $37.00 round figure and seems poised to prolong the recent well-established uptrend from the April monthly swing low.

From a technical perspective, the overnight breakout through a short-term descending trend channel, which constituted the formation of a bullish flag pattern, and the subsequent move up validate the constructive outlook. However, a slightly overbought Relative Strength Index (RSI) on the daily chart warrants some caution. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before placing fresh bullish bets around the XAG/USD and positioning for further gains.

That said, any corrective slide is more likely to attract fresh buyers and remain limited near the ascending channel resistance breakpoint, around the $36.90-$36.85 region. A convincing break below, however, might prompt some technical selling and drag the XAG/USD further towards the $36.40-$36.35 horizontal support en route to sub-$36.00 levels, or the weekly low. The latter should act as a key pivotal point, which if broken could pave the way for some meaningful downside in the near term.

Nevertheless, the XAG/USD seems poised to climb further toward testing the February 2012 swing high, around mid-$37.00s. Some follow-through buying should allow the XAG/USD to aim toward reclaiming the $38.00 round figure. The momentum could extend further toward the next relevant hurdle near the $38.50-$38.55 region.

Silver 4-hour chart

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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