After the Huge Drop in Silver Prices, Is an Advance Beyond $30 Possible?

Summary:

Trying to make sense of the volatility in silver prices on the XAGUSD just got easier with this price analysis of the commodity.

Silver price has resumed the uptrend after Tuesday’s 15% drop which drove prices down from the 2020 highs to the tops of July 2020. Today’s 3.02% gain extends the silver price action’s bounce off the support at 24.66 to enable it to push above the $26 mark. Tuesday’s selloff was apparently triggered by the announcement from Russia on commencement of coronavirus vaccinations in the country, which spurred a round of optimism that the coronavirus and all the things it came with would soon be over with. Some strength in the greenback also contributed to force down prices in what was the worst daily decline since 2008.

However, the bulls seem to have stabilized the markets once more, and prices are back on the upside. Such corrective pullbacks after a few days of aggressive and sustained upside, are common. For commodities like silver, such aggressive price movements are not frequent, but they do happen, and if prices are driven upwards as aggressively as they were, a V-shaped pullback cannot be ruled out.

Outlook for Silver Prices

Price action on the daily chart of XAGUSD shows that today’s candle is now challenging resistance at 26.325. A break above this level allows the XAGUSD price action to aim for the 28.073 resistance, with last Friday’s high of 29.919 continuing to serve as the resistance to beat for bulls.

On the flip side, rejection at the current resistance could favour an additional pullback, producing lower highs that could initiate further selling that needs to break below 24.66 to bring in 23.02 and possibly 21.33 as other downside targets.