Silver Hits a Short-term Upside Support Line
|XAG/USD traded slightly lower during the Asian morning Tuesday, but hit support near the crossroads of the 17.76 level and the upside line drawn from the low of July 12th, and then, it rebounded somewhat. As long as the white metal is trading above that upside support line, we would consider the short-term outlook to be somewhat positive, but we would like to see a decent rebound above 18.30 before we get confident on decent upside extensions.
Such a break may add more credence to the bullish case and could initially pave the way towards the high of September 6th, at around 18.80. The bulls may decide to take a break after testing that zone, thereby allowing the price to correct a bit lower, but as long as it would be trading above the aforementioned upside line, we would see decent chances for another, stronger leg north. If that leg manages to bring the rate above the 18.80 territory, then we may see the bulls putting the 19.64 zone on there radars. That area was tested on September 4th and is the highest since September 2016.
Taking a look at our short-term momentum studies, we see that the RSI rebounded from slightly above its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators suggest that the metal is running out of downside momentum, and support somewhat the notion for an upcoming rebound.
On the downside, we would like to see a decisive dip below 17.76 before we start examining whether the bullish case is out of the equation. Such a dip could signal that the bears have gained the upper hand and may initially pave the way towards the 17.20 territory, marked by the inside swing highs of August 20th and 21st. Another break, below 17.20 could extend the slide towards the 16.80 zone, which provided decent support from August 8th until August 19th.
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