Silver is edging lower today as market participants weigh their options after the sizeable correction. The recent double top pattern achieved its theoretical target of 22.90 and thus does not appear to exert bearish pressure anymore. Silver has actually returned inside its December 2022-February 2023 rectangle, hence pointing to a range-trading phase.
The bears are keen on another sell-off, but the momentum indicators are sending a very mixed signal at this stage. The Average Directional Movement Index (ADX) is slightly above its 25-threshold and pointing to a weakening bearish trend. The RSI is hovering below its 50-midpoint and the stochastic oscillator is trading sideways, a tad above its oversold territory. In addition, the relative tightening of the Bollinger bands could be seen as an extra sign of the potential consolidation inside the aforementioned rectangle.
Amidst this environment, the bears appear to be targeting the 23.34 level populated by the 61.8% Fibonacci retracement of March 8, 2022 – September 1, 2022 downtrend and the 100-day simple moving average (SMA) respectively. Should they manage to break this level, they would then come up against the busy 22.13-22.58 area. This range is defined by the June 6, 2022 high, the 50% Fibonacci retracement and the 200-day SMA.
On the other hand, the bulls are anxiously trying to recover part of their recent losses. A successful break for the key 23.76 level would potentially help them build some momentum as they set their eyes on the 24.45-24.53 range. This is important from a short-term perspective as it is also the upper boundary of the recent rectangle. A decisive break could be a significant win for the bulls as they would then aim for the 78.6% Fibonacci retracement at 24.92.
To conclude, silver bears enjoyed the impressive decline, but they now have to fight even harder to maintain these gains, with 23.76 being the first key level.
