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- Silver rallied some buying near the $ 23.45 region in response to the weaker US CPI report.
- The lack of repeat purchases requires caution before positioning yourself for further profits.
- The setup favors bearish traders and supports the prospect of an eventual collapse.
Silver renewed its daily highs in response to the US CPI report, which was weaker than expected despite a lack of follow-up buying. The white metal was last traded around the $ 23.70-65 region, almost unchanged for the day.
From a technical standpoint, XAG / USD made some buying just before supporting the August 27th swing low near the $ 23.35 region. However, the bulls struggled to capitalize on the move and faced rejection near an earlier strong support breakpoint around the $ 23.80-75 region. These levels should now serve as an important linchpin for short-term traders and help determine the next stage in a directional move for the commodity.
Meanwhile, the technical indicators on the 4-hour / daily chart maintained their bearish bias and have also rebounded from the oversold area on the 1-hour chart. The lineup appears firmly in favor of bearish traders and supports the prospect of an eventual breakdown to the downside. Therefore, a subsequent dip below the $ 23.00 mark towards challenging YTD lows around the $ 22.20-15 region touched on Aug. 8 remains a distinct possibility.
On the downside, any positive move beyond the $ 23.75-80 support could be turned into resistance, encountering stiff resistance near the $ 24.00 level. However, any sustained move beyond that could trigger a short covering move, pushing XAG / USD towards the interim resistance at USD 24.40. Bulls could then attempt to test monthly highs in the $ 24.85 area.
Silver 4 hour chart
Technical levels to watch
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