Silver Price Forecast: XAG/USD consolidates losses below $51.00
- Silver bounced up from $50.00 but has failed to find support above $51.00.
- Choppy and directionless trade prevails as investors await the release of delayed US data.
- XAG/USD technical picture remains bearish after last week's reversal from $54.30 area.
Silver (XAG/USD) is showing a mild recovery attempt on Monday. The pair bounced up from $50.00 lows on Friday but is struggling to find acceptance above the $51.00 level. which leaves price action hovering in no man's land, after a sharp reversal from the $54.30 area last week.
Precious metals trimmed losses on Monday, with risk appetite subdued as Japan threatened China with military action if Taiwan were to be attacked. Investors, however, are on a wait-and-see stance, awaiting the release of a stream of delayed US macroeconomic releases later in the week, which is expected to shed some more light on the momentum of the US economy and the Federal Reserve's interest rate decisions.
Technical analysis: Silver has a significant resistance level above $54.00
The technical picture remains bearish, following a sharp reversal from the $54.30 area last week, which highlights a potential double top formation at the mid-range of the $54.00s. This is a common pattern of trend shifts that comes after a 70% rally in the last seven months.
Meanwhile, the lower high on Friday endorses the bearish view, and the weak oscillators, with the 4-hour Relative Strength Index (RSI) depressed below the 50 level, suggest that the current rebound is frail and that a deeper correction may be forthcoming.
Immediate support remains at Friday’s lows of $50.00, which, so far, is closing the path towards the October 23 and 31 highs, near $49.35, and the November 4 low, at $46.95. To the upside, a previous support at the 52.10 area (November 13 low) is likely to challenge bulls ahead of the November 14 high at $53.65 and the long-term highs between $54.60 and $54.80.
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
