The Silver (XAG/USD) market is currently witnessing a shift in sentiment, as bearish signals emerge across multiple technical indicators. After rallying to a six-week high of $33.69 in late April, Silver has since reversed direction, dropping for the second consecutive session and trading around $31.90 per troy ounce during early Asian trading hours on Thursday.
This decline follows a break below a well-defined ascending channel, raising concerns over the sustainability of the recent bullish trend. NordaLueur’s financial analysts shed light on the topic with sharp analysis and strategic insight in their article.
Technical Breakdown and Bearish Developments
One of the most prominent indicators of this reversal is the behavior of the 14-day Relative Strength Index (RSI), which has dipped below the critical 50 level. This move signals a shift in momentum from bullish to bearish and typically suggests that selling pressure is starting to dominate. The RSI is a widely observed momentum oscillator, and readings below 50 often correlate with extended downside risk.
Adding to the bearish sentiment, Silver has now slipped beneath the nine-day and 50-day Exponential Moving Averages (EMAs). These EMAs, which currently stand at $32.46 and $32.47, respectively, acted as dynamic support during the previous uptrend.
Now, with price action positioned below both EMAs, they are expected to act as resistance on any short-term rebounds. The confluence of these levels creates a significant technical barrier that XAG/USD must overcome to reestablish bullish control.
Key Support and Resistance Levels
The immediate downside target is the eight-month low of $28.00, last reached on April 7. This level serves as a crucial support zone, and if breached, could accelerate the bearish trend further. Below $28.00, additional support may emerge around $27.50, aligning with a previous consolidation area from early March.
On the upside, any bullish correction must first contend with initial resistance at the nine-day EMA of $32.46, reinforced by the 50-day EMA at $32.47. A decisive breakout above this range could offer temporary relief to bulls and possibly drive prices toward the six-week high of $33.69, established on April 24.
A sustained rally beyond this point may trigger further buying interest, propelling XAG/USD toward the seven-month high of $34.59, recorded on March 28. However, given the current deterioration in momentum and structure, such a move would require a significant shift in market sentiment or a catalyst in the form of economic data or geopolitical tension.
Market Structure and Pattern Breakdown
From a chartist’s perspective, the break below the ascending channel pattern marks a structural change in the Silver market. Ascending channels often reflect steady upward momentum and trader confidence. The violation of this channel signals that bullish momentum has faded, and the market could be transitioning into a corrective phase.
Moreover, the current retracement is occurring with increased volume, suggesting that the sell-off is gaining conviction. When accompanied by declining RSI and broken moving averages, this typically adds to the credibility of the developing bearish trend.
Macro Context and Risk Factors
While technicals point toward weakness, broader macroeconomic factors should not be ignored. Silver prices are highly sensitive to interest rate expectations, US Dollar strength, and inflation data. Recent hawkish rhetoric from the Federal Reserve has bolstered the greenback, exerting additional downward pressure on precious metals priced in USD.
Furthermore, higher yields on US Treasury securities have made non-yielding assets like Silver less attractive, reinforcing the emerging bearish bias. Unless a dovish pivot or unexpected economic shock occurs, Silver may struggle to maintain its previous bullish momentum.
Short-Term Trading Outlook
In the short term, XAG/USD may oscillate between $30.50 and $32.50, as traders assess incoming data and technical signals. Traders should monitor:
- RSI levels for confirmation of continued bearish divergence.
- Price reaction around the nine-day and 50-day EMAs.
- Volume trends, especially during intraday pullbacks or rebounds.
Should the price break decisively below $30.50, bearish momentum is likely to intensify toward the $28.00 zone. Conversely, a close above $32.50 could indicate a possible bullish retracement, though strong confirmation would be needed before resuming long positions.
Conclusion
The technical landscape for Silver has turned bearish, with the price breaking below both its ascending channel and key moving averages. The dip in the 14-day RSI below 50 reinforces the growing downside momentum. Immediate support lies at $28.00, while resistance is clustered around $32.46–$32.47. Unless Silver reclaims these resistance levels decisively, the path of least resistance remains to the downside, and further weakness cannot be ruled out.
Investors and traders should remain cautious, particularly in the face of shifting macroeconomic dynamics and the potential for further volatility in global markets.
