XAG / USD rebounds above USD 22.00 due to broad US dollar weakness
- XAG / USD soars as US bond yields fall two basis points and stand at around 1.52%.
- A bullish penetrating pattern on the daily chart suggests that silver is about to rebound.
- A positive divergence on a daily chart supports the outlook for XAG / USD for higher prices.
Silver (XAG / USD) is reducing two-day losses, rising 3.05% on the day and trading at $ 22.17 at the time of writing. The rally in XAG / USD is underpinned by falling US bond yields, with the 10-year benchmark note’s coupon at 1.520%, a decline of nearly two basis points (bps).
The US dollar index, which tracks the performance of the greenback against a basket of six currencies, is sliding 0.20% for the first of two days, currently at 94.22.
XAG / USD Price Prediction: Technical Outlook
The XAG / USD price movement shows some confluences. First, the price action for the past two days looks like a bullish penetrating pattern, indicating an upward trend. Second, the price action has printed successive lower lows which, along with the Relative Strength Index, represents a positive divergence that could propel the white metal towards higher prices.
The first coverage zone would be $ 23.00. A break in the latter would expose the 50-day moving average (DMA) at $ 23.79, followed by the September 3rd high at $ 24.86
On the other hand, failing at $ 22.00 could pave the way for further losses. The first demand zone would be $ 21.00. A break from this level could push XAG / USD to $ 20.00 psychologically, followed by July 15, 2020, a high of $ 19.48.
The Relative Strength Index (RSI) stands at 38 and is targeting a higher value, suggesting easing downward pressure. With the RSI staying below the 50 center line, the downtrend could resume; however, the positive divergence could motivate buyers to increase prices. Caution is advised.
ADDITIONAL LEVELS TO VIEW