2016-11-29 11:39:18

Review and dynamics
The pair XAG/USD has broken important support level of 17.55 (ЕМА200 on the daily chart) and continues to decline in the descending channel on the daily chart.

In the middle of last week the pair XAG/USD reached the monthly lows near the level of 16.20 (ЕМА200 on the monthly chart and the lower line of the descending channel on the daily chart).

After the rebound from this level the pair XAG/USD had grown for two days as part of the short-term upward correction. However, the pair failed to rise above the level of 16.85 and started to decline again.

Precious metals showed the strongest decline amid strengthening of the USD in the market after the victory of Donald Trump in the presidential election. The pair XAG/USD fell from monthly highs at the level of 18.95 by almost 17% to the level of 16.20.

After the highs of 21.10, which the pair reached at the beginning of July, up to date the pair XAG/USD has lost almost 30%. At the beginning of today's European session the pair is traded near the level of 16.60.

Our opinion
The pair XAG/USD continues to decline in the descending channel on the daily chart with the lower limit near the level of 16.05. Downtrend continues. Breakdown of the important support level of 16.20 may trigger further decline with the target of 13.65 (annual lows).

Attention of the market participants is now focused on the Fed's meeting in December, as it is expected that the Fed will increase interest rate at this meeting. If the Fed continues further monetary policy tightening, the prices of the precious metals will decline further down.

Otherwise, the prices of the precious metals may rebound and start correctional growth to the levels of 17.55 and 18.00, since the decline in the interest rate in December has already been incorporated into the prices.

On the weekly and monthly charts the indicators OsMA and Stochastic give sell signals. On 4- hour and daily charts the indicators give signals for the long positions, indicating probability of the upward correction with short-term targets of 16.85 and 17.10 (lows of October).

It is likely that prior to the release of the US labor market data for November on Friday, the pair XAG/USD will remain in the range of 16.85 and 16.20.

In case of the decline in the pair next support level will be at the levels of 15.80 (lows of May), 14.90, 13.65 (lows of January 2016).

As an alternative scenario the USD may weaken, while the prices of the precious metals will go up. Breakout of resistance levels of 17.55, 18.10 may resume upward momentum in the pair XAG/USD.

In case of breakdown of resistance levels of 21.10, 21.75 (Fibonacci 23.6% after the decline in the pair XAG/USD in May 2011 from the level of 47.90 to 13.65) the pair XAG/USD may resume the rise in the ascending channel on the weekly chart with the upper limit above the level of 26.70 (Fibonacci 38.2%) with the target of 35.00 (highs of 2012 and Fibonacci 61.8%).

Support levels: 16.20, 16.05, 15.80, 14.90 and 13.65.
Resistance levels: 16.85, 17.10, 17.55, 18.10, 18.30, 18.95, 19.15, 20.00, 20.60, 21.10 and 21.75.

Trading tips
Sell on the market. Stop-Loss: 17.10. Take-Profit: 16.20, 16.05, 15.80, 14.90 and 13.65.
Buy Stop: 17.10. Stop-Loss: 16.90. Take-Profit: 17.55, 17.70, 18.10, 18.30 and 18.95.

Breakout of 18.95 and 18.10
Breakout of 18.95 and 18.10

Indicators give Buy signals
Indicators give Buy signals