The Silver Spot Price (XAGUSD) pulled back during the Monday trading session as the commodity’s investors looked to consolidate their profits following a strong rally. The spot price has risen over 10% for March as investors flocked to the precious metal amidst the potential banking crisis following the collapse of two banks in the United States.
The fears of contagion spreading across the global economies helped push the safe haven currencies and commodities higher as investors looked to limit their exposure to the pending doom. However, the recent assurance by several lawmakers and regulators on the stability of the banking industries in their respective economies could help cap the upside for the commodity.
The daily chart shows that the precious metal is trending upward and is currently above both the 50-day and 200-day moving averages. The price action has firmly established a major resistance level and major support level at the price level of $24.269 an ounce and $18.232 an ounce, respectively.
Looking at the 4H chart shows that the price action of the precious metal has formed a rising wedge trading pattern as it continues to trend higher. The price action recently broke out of the wedge at the pivot point at $22.964 an ounce, and the short-term movement of the price action could be primarily driven by the movement of the price action around the pivot point.
The bulls could look for the price action to break through above the breakout level as a confirmation of buyers. The buying momentum could push the price action of the precious metal towards the resistance level of $23.262 an ounce, a level of interest for the bulls. A breakthrough above the resistance level supported by significant volume could signal an extended rally. The bulls could be confident about reaching the target at the resistance level of $23.533 an ounce.
A substantial move away from the breakout level could bring the initial support level at $22.608 an ounce into play and could be a level of significance for the bears. A breakthrough below the initial support level could confirm an elevated selling sentiment and could bring the 50-day moving average into play as bears target the support level at $22.152 an ounce.
The current hiatus from the recent silver spot rally seems to have been brought about by investors looking to gain the fruits of their investments and consolidate their profits. If there is no major adverse banking news, it would be hard to bet against the resumption of the rally. Thus, the bulls could look at the price level of $23.262 an ounce as a possible entry-level, with the resistance level at $23.533 an ounce, as the next target.
Sources: TradingView, Reuters
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