XAG/USD (silver) has been sliding since tagging the 22 handle in February.
(silver 4h chart, 4/24)
Exhaustion?
This week silver consolidated by started to dip during the 4/24 session. As we got into the US part of the session, silver dipped below 19 briefly but bounced back up above this week’s high and is threatening the 20 handle, possibly looking to test last week’s high near 20.35. The sharp reversal from a new low on the week to a new high on the week can reflect exhaustion and suggest at least some short-term bullish outlook, perhaps back toward the 22 handle.
Higher Low to be Next Clue:
More bullish clues will be needed if we are to shift from the bearish market since February . For example if we get a pullback after the current bullish attempt, look at where it establishes a bottom. If it bottom above the 19 handle, it can serve as a minimum requirement for to say the market has turned from bearish to neutral. A break above 20.40 can then introduce the bullish outlook with 22 and the 2014-highs in sight.
This neutral-bullish outlook is also based on the fact that silver is coming off a key support seen in the daily chart.
(silver 4/24, daily chart)
Pivots:
As you can see in the daily chart, the market is coming off a key support pivot. The 20.35-45 area is a key resistance pivot as well. Above that, the 22 handle will be key. The stochastic suggests a bullish swing coming, so silver looks poised to test the 20.35-40 pivot area.
Consolidation, Congestion:
The overall mode in the daily chart is neutral, but with prevailing bearish bias if you go back into the first half of 2013. The second half of the year until now, silver has been in some what of a consolidation, or even congestion as you can spot lower highs and higher lows.
Fan Yang, CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes.
