Yesterday, the XAG/USD pair rose significantly and reached local highs near 15.50, the highest mark for the last month.
The price went up as the US Dollar is weakening affected by rapid devaluation of the Yuan, started on Tuesday. Analysts are expressing concerns that such unexpected events may significantly influence the timing of the US interest rate hike which is currently the main support for the US currency.
Support and resistance
Bollinger Bands on the daily chart indicate that an active “bullish” trend is forming. The price range is widening, however, it currently fails to keep up with the price dynamics. A correctional decrease is possible in the short run.
MACD continues steady upward trend. It is recommended to keep opened long positions and wait to open new ones.
Stochastic has reached its highs in the overbought zone and is turning to sideways. It indicates that the pair will be significantly overbought in the short run. A correctional rollback is worth considering.
Support levels: 15.40 (the pair is testing this level), 15.25, 15.00, 14.77, 14.63, 14.49 and 14.37 (24 July and 4 August record low).
Resistance levels: 15.58 (the nearest mark and 12 August local high), 15.68 (13 July high), 16.00 (reached at the end of June) and 16.46 (18 June high).
Open long positions when the pair bounces off the current supper levels around 15.25 (with appropriate indicators signals). Set the target at 15068 and stop-loss at15.00-14.77.
In case of a correctional rollback with the breakdown of 15.00, open short positions with targets at 14.63-14.49 and stop-loss at 15.40.