The silver market has been caught in a turbulent storm lately, with prices facing persistent downward pressure for five consecutive days. In this article, we'll delve into the factors contributing to silver's decline and explore potential scenarios for its future price movements.
Bearish Trends
As the European session kicked off, silver continued its descent, hitting a two-week low of approximately $23.65. This sustained decline is causing concern among investors, indicating that silver is grappling with significant selling pressure.
One crucial indicator of this bearish trend is the daily chart's oscillators, which have recently started displaying negative signals. This suggests the potential for further depreciation in the near term. However, it's important to note that the Relative Strength Index (RSI) on hourly charts is signaling oversold conditions, hinting at the possibility of silver stabilizing around its current levels.
Technical Analysis
To gain deeper insights into silver's potential price movements, we can turn to technical analysis. Presently, silver is trading near the 50% Fibonacci retracement level of its recent rally, extending from $22.25 to $25.00. A convincing break below this level could expose silver to additional losses, possibly leading it toward the 61.8% Fibonacci retracement level around the $23.30-$23.25 range, with the $23.00 round-figure mark looming as a plausible target.
If the downward momentum persists, silver may test a robust horizontal support zone spanning from $22.20 to $22.10. This zone has the potential to serve as a formidable barrier against further declines.
Potential for a Reversal
On the flip side, there are factors that could usher in a reversal of silver's fortunes. The 200-period Simple Moving Average (SMA) currently stands as an immediate resistance around the $23.75-$23.80 range. Should silver breach this level, it could set its sights on the $24.00 round-figure mark, representing the 38.2% Fibonacci retracement level.
Surpassing this critical threshold could trigger a short-covering rally, potentially propelling silver toward the 23.6% Fibonacci retracement level at approximately $24.30-$24.35. If this level is breached, attention may turn to a descending trend line resistance established over four months, situated near the $24.70-$24.75 zone.
A sustained breakthrough above the psychological barrier of $25.00 could mark a significant shift in favor of bullish traders, potentially signaling the start of an upward trend.
Conclusion
In summary, silver's recent price movements have been characterized by relentless selling pressure, pushing it to a two-week low. Technical analysis suggests that silver may face additional downside risks. However, the presence of oversold conditions on hourly charts and potential support levels may lead to consolidation.
Conversely, if silver manages to overcome key resistance levels, it could pave the way for a bullish reversal. Traders and investors should closely monitor these technical indicators and market developments to gain a clearer perspective on silver's direction in the coming days and weeks.
Our preference
Short positions below 24.00 with targets at 23.30 & 23.00 in extension.