Silver Price Analysis: Flag pattern on 4-hourly chart favours XAG/USD bears
FXStreet News

Silver Price Analysis: Flag pattern on 4-hourly chart favours XAG/USD bears

  • Silver struggled to capitalize on the previous day’s positive move to three-day tops.
  • A short-term ascending channel constitutes the formation of a bearish flag pattern.
  • Technical indicators on the daily chart further add credence to the negative outlook.

Silver witnessed some selling during the first half of the trading action on Wednesday and eroded a part of the previous day’s strong positive move to three-day tops.  The XAG/USD maintained its offered tone through the early European session, albeit has managed to recover a part of its intraday losses. The commodity was last seen hovering around the $25.75-80 region, still down over 1% for the day.

Meanwhile, the recent bounce from the $24.85-80 region, or five-week lows touched last Friday has been along a descending channel. Given the recent sharp fall, the channel constitutes the formation of a bearish flag on short-term charts.  The bearish set-up is reinforced by the fact that the XAG/USD has been struggling to capitalize on attempted recovery moves beyond the $26.00 mark. Moreover, oscillators on the daily chart have just started drifting into the negative territory.

Hence, a subsequent slide towards the trend-channel support, near the $25.20 region, en-route the key $25.00 psychological mark, remains a distinct possibility. Some follow-through selling below the $24.85-80 region will reaffirm the bearish breakdown.  The XAG/USD might then turn vulnerable and accelerate the downfall further towards challenging the very important 200-day SMA support, currently around the $24.00 round-figure mark.

On the flip side, any meaningful recovery attempt would be seen as a selling opportunity and continue to confront resistance near the $26.00 mark. This, in turn, should cap the upside for the XAG/USD near the trend-channel hurdle, around the $26.20 area.

XAG/USD 4-hourly chart


Technical levels to watch


FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.