- Silver trades sideways today after a quick 12% correction
- Sell-off stopped a tad below a busy resistance area
- Momentum indicators are sending mixed signals
Silver is trading sideways today, bouncing off the October 5, 2023 ascending trendline and trying to test the resistance set by the 50-day simple moving average (SMA). This appears to be the first reaction from the bulls after six consecutive sizeable red candles that pushed silver around 12% below the December 4, 2023 high of 25.90.
In the meantime, the momentum indicators are showing some early signs that the correction might have run its course. The Average Directional Movement Index (ADX) is trading sideways and thus pointing to a weakening bearish trend in the market. Similarly, the RSI is trading below its midpoint but has failed to make a lower low.
More importantly, the stochastic oscillator is moving aggressively lower towards its oversold area and building a significant gap from its moving average. However, a bullish divergence appears to have formed as the higher low in silver has been met by a lower low in the stochastic oscillator.
Should the bears still feel hungry, they could try to push silver below the October 5, 2023 ascending trendline. They could then test the support set by the busy 22.24-22.50 area, which is populated by the June 6, 2022 high and the 50% Fibonacci retracement of the March 8, 2022 – September 1, 2022 downtrend. Even lower, the 21.13-21.35 range could be the last hurdle in the bears’ attempt to test the October lows.
On the other hand, the bulls are keen on regaining market control and leading silver above the 23.12-23.49 area, which is defined by the 61.8% Fibonacci retracement, the 50-, 100- and 200-day SMAs, and the long-term September 1, 2022 trendline respectively. If successful, they could then have a go at pushing silver towards the 23.76 level.
To conclude, silver bears could be taking a breather after a strong sell-off, but the bulls with some arguable support from the momentum indicators appear ready for a rebound.
. This appears to be the first reaction from the bulls after six consecutive sizeable red candles that pushed silver around 12% below the December 4, 2023 high of 25.90. ){kind=link}