Because of the Bank holiday in Europe and the USA trading at the European trading floors is sluggish, which helped strengthening in the USD. Speeches of the FOMC member Mr. Maester and vice chairman of the US Fed, Mr. Fisher are scheduled for today ( 19:00 and 19:45 (GMT+3)).
Precious metals are at the opening levels of Monday. However, on the daily chart XAG/USD is declining amid positive retail sales statistics of the USA. Consumer price index in the USA rose on the monthly and annual basis, which probably allow Janet Yellen to announce interest rate increase in the USA before the end of this year.
Precious metals are safe haven in the period of instability, although they do not bring high dividends. Currently, due to the rise in the USD we can suppose that the price of the precious metals will do down in the medium-term.
Support and resistance
From the technical point of view the pair XAG/USD is in the important resistance zone of the upward correction between 17.65 (Fibonacci 38.2%) and 16.75 Fibonacci 23.6%), and the lines ЕМА200 (17.25) and ЕМА144 (16.90). Breakdown of these levels will enable the pair to go to 0% Fibonacci (15.35), facing resistance of 16.25, 16.00 and 15.70 on the way. This scenario is possible if the US Fed does not change its policy until the end of this year and the US economy will not show signs of poor recovery.
On the four-hour chart OsMA and Stochastic give sell signals.
Support levels: 17.65 and 17.25.
Resistance levels: 16.90, 16.75, 16.60, 16.35 and 16.25
Short positions can be opened in the minimum trade size with the target of 16.80. Safer sales –when the price breaks down the level of 16.75 and OsMA will go below the zero line. In this case it is recommended to place pending orders Sell Limit at the price levels of 17.25 and 17.65 and Sell Stop at the price of 16.35 and 16.25 with the targets of 16.00, 15.70 and 15.35.
Alternative scenario is possible if the price breaks down the level of 17.65. The target in this case will be at the level of 50% Fibonacci with the price of $18.35 per troy ounce.