- Silver built on the previous day’s bounce from over one-week lows and edged higher on Wednesday.
- The moves between two converging trend lines constitute the formation of a symmetrical triangle.
- Neutral technical indicators on the daily charts warrant some caution before placing directional bets.
Silver edged higher on Wednesday and recovered further from one-and-half-week lows, around the $27.40 region touched in the previous day.
The XAG/USD maintained its bid tone through the mid-European session and was last seen trading around the $27.80 region, up nearly 0.50% for the day. The uptick, however, lacked any strong follow-through buying and thus, warrants some caution before positioning for any further appreciating move.
Looking at the broader technical picture, silver has been oscillating between two-converging trend lines over the past one month or so, forming a symmetrical triangle on the daily chart. This marks a consolidation phase and points to indecision among traders over the near-term trajectory.
Meanwhile, technical indicators on the daily chart – though are holding with a mild bullish bias – so far, have been struggling to gain any meaningful positive traction. This, in turn, suggests that the direction of the next major move could only be determined after a valid breakout.
From current levels, the $28.00 mark is likely to act as an immediate hurdle ahead of the $28.25-30 supply zone. The latter coincides with the top end of the symmetrical triangle. A sustained move beyond has the potential to push the XAG/USD towards monthly tops, around the $28.75 area.
The positive momentum could further get extended and allow bulls to aim back to reclaim the $29.00 round figure. The next relevant resistance is pegged near the $29.40-50 region, above which the XAG/USD seems all set to climb further towards the key $30.00 psychological mark.
On the flip side, the overnight swing lows, around the $27.40 region, marking the triangle support, should continue to protect the immediate downside. A convincing break below might prompt some technical selling and accelerate the slide further towards the $27.00 mark.
Some follow-through selling would expose a previous strong horizontal resistance breakpoint, now turned support near the $26.00 mark. The XAG/USD could eventually drop to test the $26.00 round-figure mark.
XAG/USD daily chart
Technical levels to watch