Silver is on the verge of a downside breakout
- XAG/USD bulls step in at the New York session lows.
- Traders are looking out for the US CPI data later in the week.
Silver is stablising the offer from overnight and is up some 0.11% at the time of writing.
On Tuesday, the price was ending the day down near 1% to $27.61 following a fall from the $27.97 high to a low of $27.50 and the gold to silver ratio rallying some 0.6% on the day.
The S&P 500 is worth noting as the price of silver has been closely correlated with it of late.
For instance, the index has been showing little evidence of a convincing recovery and breakout to fresh highs since it fell hard in the middle of last month when silver prices also experienced a setback.
Additionally, the US dollar has been firmer of late and India, a large consumer due to its industrial demand, has been battling against Covid.
Traders, on the other hand, are looking for a period of transitory inflation could still prove supportive for the precious metals as it suggests that market pricing for Fed hikes remains too hawkish.
This will make this week’s US Consumer Price Index and next week’s Fed potentially critical for silver prices.
XAG/USD technical analysis
Technically, the price of silver burst below the once-dynamic trendline support which has now turned into a counter trendline from which the bears have piled in at horizontal resistance.
This is a significant technical development that could result in a downside extension on the daily chart for a fresh corrective low of the monthly bullish impulse.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
