This precious metal has been consolidating inside a triangle pattern for quite some time.
Is it ready to break out yet?
As you can see from silver’s 4-hour chart below, price has formed lower highs since May and has found support around $21 per ounce.
Silver (XAG/USD): 4-hour
XAG/USD 4-hour Chart
Price is currently testing the descending triangle support, possibly attempting to make a break for it this time. If all works out in favor of the bears, silver could tumble by the same height as the formation.
Similarly, a move above the triangle top could trigger a rally that’s approximately the same size as the chart pattern.
So, which way is silver likely to go?
Technical indicators seem to be pointing to a bearish move, as the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside.Also, these moving averages are in line with the triangle top to add to its strength as a ceiling around $21.50. This means that any bounce off support is bound to hit an upside barrier close by.
Stochastic is heading south, so silver prices might follow suit while selling momentum is in play. The oscillator has plenty of ground to cover before reflecting oversold conditions, so there’s still a lot of bearish energy to go around.
Most commodities are in the red lately, as dollar strength and risk-off flows seem to be the main themes playing in the markets.
Don’t forget that we’ve got a handful of central bankers giving testimonies later today, so there’s bound to be major swings in sentiment, too!
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