Overview and dynamics
Silver, like other precious metals, has strengthened considerably since the beginning of the year. XAG/USD pair increased by almost 55%, having reached the level of $21.10 per ounce in early July. Within the upward correction to the global decline of XAG/USD pair since May 2011 from the level 47.90 to a level near the level 13.65, XAG/USD pair almost reached the level 21.75 (Fibonacci level 23.6%) in the beginning of July.
However, then XAG/USD pair fell and for the second month now has been trading mostly in the range between the levels 20.60 and 19.40.
To a lesser extent the movement in the range can be attributed to XAU/USD pair, however, the suspension of the further growth of precious metals prices is obvious.
Despite the continuing uncertainty in the global economy, the turbulence in financial markets due to Brexit is gradually decreasing. US stock indices are hitting new records, which indicates higher inclination of investors to buy riskier assets.
Despite the fact that the Fed left the interest rates in the United States unchanged in July, representatives of the US central bank said that the short-term risks to the US economic outlook have declined. The Fed hinted at the possibility of rate hikes in the coming months, however, no clear signal to the rate increase in September followed. Apparently, even such "fuzzy" signals from the Fed deter buyers of precious metals from aggressive purchases.
In early August, XAG/USD pair pushed off the top limit of the range near the level 20.60 and the downward trend is gaining momentum.
OsMA and Stochastic on the 4-hour, daily, weekly charts have turned to the side of the sellers. Today, XAG/USD pair found support at 19.60 (EMA200 on 4-hour chart), but is approximately in the middle of the descending channel on the 4-hour and daily charts. Breakdown of this level could send XAG/USD to the support level 19.05 (EMA200 on the weekly chart).
The next support levels in the event of a downward movement will be the levels 18.20 (EMA144 on the weekly chart), 17.25 (EMA200 on the daily chart).
Breakdown of the level 17.25 will return XAG/USD pair to the downtrend. Such a scenario would be relevant in the case a tough position of the Fed on further rate hikes in the United States.
Otherwise we will see a further increase in the prices of precious metals, including silver. And in the case of breaking the resistance level 21.75 XAG/USD pair will resume its growth within the upward channel on the weekly chart with the upper limit near the level 24.00 (mid-2013 highs).
Two opposing factors (the probability of an soon increase in US interest rates, on the one hand, and the continuing uncertainty in the global financial markets, as well as the easing of monetary policies by the number the world's central banks, on the other hand) will swing the price of precious metals and pull them in different directions.
Support levels: 19.60, 19.05, 18.20, 17.25
Resistance Levels: 20.00, 20.60, 21.10, 21.75
Sell Stop 19.40. Stop-Loss 20.10. Take-Profit 19.05, 18.20, 17.25
Buy Stop 20.10. Stop-Loss 19.40. Take-Profit 20.60, 21.10, 21.75, 22.00, 24.00
The indicators have turned to the side of the sellers
In the upward channel