XAG/USD finds buyers again near $22.40, recovery seems limited
- Silver prices are rallying as DXY eases, but not out of the woods just yet.
- XAG/USD is facing strong resistance at the bearish 50-DMA barrier.
- Bears see a firm break below the rising trendline support at $22.43.
silver The price (XAG/USD) is taking a breather above $22.50 after a 5-day uninterrupted downward spiral.
A small drop in the US dollar across the board as Asian equities and US stock futures regain traction ahead of this Friday’s PCE inflation data. The US dollar index eased from its 18-month high of 97.29 and is now trading at 97.19, down 0.07% on the day.
The greenback gained strength this week, mainly in response to the Fed’s dovish outlook, stronger US fourth-quarter GDP and geopolitical risks between Russia and Ukraine.
Markets are taking profits on their dollar longs ahead of the release of critical US PCE inflation, helping silver prices find a bottom.
However, a bottom in silver prices seems a long way off as the bears are likely to stay in the game amid a bearish technical setup on the daily chart.
After breaking down from three week old ascending trendline support at $23.66 on Wednesday, selling pressures intensified and pushed silver prices sharply lower through all major Daily Moving Averages (DMA).
However, the XAG bulls managed to find support just ahead of the 6-week rising trendline support, which now stands at $22.43.
Silver price chart: daily chart
If the buyers fail to gain a foothold above the bearish 50-DMA at $22.91, the sellers are likely to return, which will again challenge the daily trendline support.
The daily close below the latter will trigger a sharp sell-off towards the Jan 7th low of $21.95, below which the psychological $21.50 level will be on sellers’ radar.
The 14-day Relative Strength Index (RSI) is attempting to rally but remains well below the center line, suggesting that downside risks remain intact.