XAG / USD appears vulnerable to its downtrend continuing
- Silver fell closer to a week-old range support on Thursday.
- The latest price action on the range indicates a bearish phase of consolidation.
- The RSI on the daily chart calls for aggressive bearish traders.
Silver slid for the second straight day on Thursday, falling closer to the lower end of its weekly trading range around the $ 22.25-20 region during Central European trading session.
From a technical point of view, the most recent sectoral price move observed in the last week or so is forming a rectangle. Given the recent sharp pullback from the three-month high in November, the rectangle could now be categorized as a bearish consolidation phase ahead of the next downtrend.
The negative outlook is compounded by the fact that the daily chart’s technical indicators are holding deep in the bearish territory. However, the RSI (14) on the mentioned chart is hovering near the oversold zone. This, in turn, warrants some caution among bearish traders ahead of key US consumer inflation numbers on Friday.
The technical build suggests that XAG / USD is more likely to continue its consolidating price move, although the bias remains firmly in favor of bearish traders. As such, any attempted recovery move could still be viewed as a selling opportunity and run the risk of fizzling out fairly quickly near the $ 22.60 supply zone.
Any sustained strength beyond this could lead to a short-term short-term cover movement and push the XAG / USD back towards the USD 23.00 mark. Some follow-up purchases beyond the $ 23.15-20 region will undo the negative bias and pave the way for further upward movement towards the $ 23.55-60 intermediate resistance on the way to the $ 24.00 mark.
On the downside, a compelling breakthrough in support of the trading range around the $ 22.20 region is seen as a new trigger for bearish traders. XAG / USD could then become vulnerable to break the $ 22.00 level and accelerate the fall to challenge the YTD low that was around the $ 21.40 area touched in September.