Correction before the bulls take over again seems possible for silver
16 December 2022
Silver against the US dollar (symbol ‘XAGUSD’) has recuperated around 17% in the last quarter reaching up to $23 area at the time of this report. Fundamentals are generally mixed, with expectations of pace slow down from the Fed in continuing efforts to bring inflation down to 2%, while uncertainty remains around possible further European sanctions against Russia and ongoing easing of anti-Covid restrictions in China.
‘Silver has gained more aggressively than gold in the last quarter with 17% against 6.35% respectively.’ said Antreas Themistokleous at Exness: ‘Of course, it moves on different drivers from those of gold, but silver’s popularity as an investment remains high. Relaxation of anti-Covid measures in China combined with a possible renewed focus on inflation could drive the price higher more in the near future.’
According to technical analysis the price of silver has been trading in an aggressive bullish momentum with the price correcting in the last session after the FED meeting and currently trading around the $23 area. With the price trading near and above the upper band of the Bollinger band last week we can deduce that the volatility is fueled up with the bands acting as a resistance level on the price forcing the correction on the technical side.
The Stochastic indicator is in the extreme overbought levels for the last week so a further correction to the downside might be a possible scenario in the short term. If this is confirmed then we might see some support around the $22 price area which consists of the 50% Fibonacci retracement level and also a point on the minor daily bullish trendline.
If the price resumes its upward movement it might face some resistance around the $24.30 price area which consists of the 78.6% of the Fibonacci and also an inside resistance level since early April 2022.