In recent trading sessions, the price of silver has experienced a sharp decline of 3.86%. This drop was triggered by strong US Treasury bond yields and a robust US Dollar. Currently, the grey metal is trading at $29.53, after two days of gains were abruptly ended.
From a technical perspective, it is worth noting that while silver has maintained a bullish bias, recent price action has formed a ‘bearish engulfing’ pattern. This shift in momentum is further supported by the Relative Strength Index (RSI) turning bearish, signaling the potential for further losses in the near future.
In terms of key support levels, traders should keep an eye on the 50-day moving average (DMA) at $29.09 as the first level of support. A breach of this level could lead to further declines towards $29.00 and the month-to-date (MTD) low of $28.66. Should selling pressure persist, the 100-DMA at $26.60 could act as a deeper support level.
Conversely, if the price of silver manages to reverse course and resume its uptrend, the next resistance levels to watch for are the June 7 high at $31.54 and $32.00. If these levels are surpassed, the metal may aim for the year-to-date (YTD) high of $32.51. This price action is depicted in the daily chart for XAG/USD.
In conclusion, the recent decline in the price of silver can be attributed to strong US Treasury bond yields and a robust US Dollar. From a technical standpoint, the ‘bearish engulfing’ pattern and bearish RSI signal the potential for further losses in the near future. Key support levels to watch for include the 50-DMA, $29.00, and $28.66, while resistance levels stand at $31.54, $32.00, and $32.51. Traders should closely monitor these levels to gauge the future direction of silver prices.
