Silver Price Analysis: Trades above 200-day average for first since March 9

Silver trades comfortably above the 200-day average for the first time in over two months.
However, a bull breather looks likely, as technical charts show overbought conditions.

Omkar Godbole FXStreet Contributor

Silver is trading well above the 200-day average at $16.935 at press time, having closed above the long-term technical line on Monday.

The semi-precious metal is hovering above the 200-day average for the first time since March 9. Prices fell in a near-90 degree manner from $17.19 to $11.64 in the seven trading days to March 18 as the coronavirus-led crash in equities triggered a global dash for cash.

The latest move above the 200-day average has reversed that price crash. The sharp rally from $11.64 is now looking overstretched, as the 14-day relative strength index is hovering well above 70 for the first time early January.

More importantly, the long upper wick attached to Monday's candle indicates buyer exhaustion and validates the overbought reading on the RSI. As a result, a consolidation or a pullback could be seen.

A break below the 200-day average at $16.935 could cause more buyers to take profit, leading to a deeper decline to $16.36 (100-day average).

On the higher side, a close above Monday's high of $17.57 would restore the immediate bullish view.

Daily chart

Trend: Overbought

Technical levels

1. R3 18.44
2. R2 18
3. R1 17.5
PP 17.06
1. S1 16.56
2. S2 16.12
3. S3 15.61

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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