FX.co ★ XAG/USD, SILVER

The silver price (XAG/USD) is holding firm after experiencing a retracement from the $70.00 level, where we see buying interest coming into the commodity above the $67.40 level on Thursday, causing the commodity to rally back into the mid-$68.00 level through the European trading hours. Technically, the picture looks positive as the price continues to hover above the old resistance level of $67.00. Currently, this resistance has become the new support point, and if this level holds, then the rally may continue in another attempt at the $70.00 psychological level. The rally above the mid-July lows near $55.00 has developed a well-defined bullish correction chart pattern, with silver progressively building higher support points while sustaining the upside momentum. However, the move up to $70.00 has met with some selling resistance, thereby delaying the extension up towards further resistance points. The $70.00 key resistance point forms the first hurdle to watch out for buyers since a convincing move above it will signal a breakout of the previous consolidation pattern on the upside. Above $70.00, focus will be directed to the mid-June high at $71.55 and further up to the 200-day simple moving average at $72.40. The momentum oscillators are also maintaining the bull bias, but they are signaling that the upward force has declined somewhat. The RSI on the daily chart for 14 periods is at 63, which is well above the 50 mark of neutrality without crossing the critical 70 overbought level. Therefore, it means that the bulls are in command but not overextended. Additionally, the MACD is trading positively, showing that the momentum is still strong even if there has been some decline. An increase in the MACD and RSI levels will help the price move towards $70.00 and even higher, to $71.55.

On the negative side, the first major level of support is found at $67.00, which served as a resistance level and now serves as a vital point of defense for buyers. Staying above this range will keep the existing bullish pattern intact and give silver some time to consolidate prior to its next move higher. Falling below the $67.00 level on a daily chart basis would undermine the present technical setup and make it more likely for the decline to continue. The next major level of support is set at $63.25, which prevented the selling pressure on August 18. Generally speaking, the outlook for the metal looks bullish as long as the price continues to trade above the $67.00 level. The nearest test will be at the $70.00 resistance barrier, which, in case of an actual breakout, may lead the pair down to the $71.55 level and even below the 200-day simple moving average at $72.40. Alternatively, if the price turns away from its current levels and closes below the $67.00 level, then the next targets could be at $63.25 and even $60.90.