Silver Price Forecast: XAG/USD rallies above $22.00 on broad US dollar weakness
- XAG/USD soars as the US bond yields drop two basis points, sitting around 1.52%.
- A bullish piercing pattern in the daily chart suggests that silver is poised for a rebound.
- Positive divergence in a daily chart supports XAG/USD prospects of higher prices.
Silver (XAG/USD) is trimming two-day losses, is climbing 3.05% in the day, trading at $22.17 at the time of writing. The rally in XAG/USD is underpinned, by falling US bond yields, with the 10-year benchmark note coupon sitting at 1.520%, down almost two basis points (bps).
The US Dollar Index, which tracks the greenback’s performance against a basket of six currencies, is sliding for the first day out of two, 0.20%, currently at 94.22.
XAG/USD Price Forecast: Technical outlook
Daily chart
XAG/USD price action depicts some confluences. First, the price action of the last two days looks like a bullish piercing pattern, suggesting upside bias. Second, the price action has printed successive lower lows, that coupled with the Relative Strength Index, consecutive higher-lows, portrays a positive divergence that could propel the white-metal for higher prices.
The first supply zone would be $23.00. A break of the latter would expose the 50-day moving average (DMA) at $23.79, followed by the September 3 high at $24.86
On the other hand, failure at $22.00 could pave the way for further losses. The first demand zone would be $21.00. A break of that level could push XAG/USD to the psychological $20.00, followed by July 15, 2020, high at $19.48.
The Relative Strength Index (RSI) is at 38, aiming higher, suggest an easing downward pressure. While RSI remains below the 50-midline, the downtrend could resume; however, the positive divergence could motivate buyers to push prices up. Caution is warranted.
ADDITIONAL LEVELS TO WATCH