- Silver enters a bullish consolidation phase during the Asian session on Wednesday.
- A slightly overbought daily RSI holds back the XAG/USD bulls from placing fresh bets.
- Any corrective pullback might be seen as a buying opportunity and remain limited.
Silver (XAG/USD) is seen consolidating the previous day’s strong gains to its highest level since February 2012 and oscillating in a narrow range during the Asian session on Wednesday. The white metal currently trades just above the $37.00 round figure and seems poised to prolong the recent well-established uptrend from the April monthly swing low.
From a technical perspective, the overnight breakout through a short-term descending trend channel, which constituted the formation of a bullish flag pattern, and the subsequent move up validate the constructive outlook. However, a slightly overbought Relative Strength Index (RSI) on the daily chart warrants some caution. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before placing fresh bullish bets around the XAG/USD and positioning for further gains.
That said, any corrective slide is more likely to attract fresh buyers and remain limited near the ascending channel resistance breakpoint, around the $36.90-$36.85 region. A convincing break below, however, might prompt some technical selling and drag the XAG/USD further towards the $36.40-$36.35 horizontal support en route to sub-$36.00 levels, or the weekly low. The latter should act as a key pivotal point, which if broken could pave the way for some meaningful downside in the near term.
Nevertheless, the XAG/USD seems poised to climb further toward testing the February 2012 swing high, around mid-$37.00s. Some follow-through buying should allow the XAG/USD to aim toward reclaiming the $38.00 round figure. The momentum could extend further toward the next relevant hurdle near the $38.50-$38.55 region.
Silver 4-hour chart
