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XAG/USD retreats from 16.55 and the 200-SMA

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The white metal ran out of momentum the last couple of trading sessions after several unsuccessful attempts to break the strong resistance level at 17.30, easing back towards the 16.55 level. This area is significant as it includes the short-term ascending trend line, as well as the 200-period simple moving average (SMA) on the daily chart. The metal this morning pushed from this key level, bringing further ratification of the bullish outlook seen since rebounding from the key support level at 14.27, dated back in the beginning of December 2014.

Currently the metal is trading slightly above the lower boundary of the upward sloping channel and if the bulls are strong enough to push the price further up, I would expect extensions towards the upper boundary of the pattern’s width and above the 18.00 level.

On the other hand, if the buyers fail to maintain positions above the short-term ascending trend line, then would be the biggest indication that the market had become significantly more bearish in the medium-term, prompting a more aggressive move towards 15.50, a strong technical level in the short and medium term.

The picture is mixed since our oscillators indicate decreasing momentum, but the 50-period moving average remains for the time above the 200- period moving average. Furthermore, the Relative Strength Index is moving upwards but remains below 50.

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