Review and dynamics
In the middle of last week the pair XAG/USD has reached the monthly highs at the level of 18.95 (ЕМА200 on the weekly chart), however, the pair failed to go above this level.
Precious metals have significantly dropped amid the rise in the USD in the foreign exchange market, which started soon after the victory of Trump in the presidential race in the United States.
The pair XAG/USD has declined from the monthly highs of 18.95 by almost 10%, to 17.25. This is the strongest weekly decline since January 2015. From the highs at the level of 21.10, which the pair XAG/USD reached in early July, it fell by 22% to the level of 17.25.
The pair is declining in the descending channel on the daily chart with the lower limit near the level of 16.05. It is likely that the decline will continue.
After the U.S. presidential election markets' attention switches to the meeting of the US Fed in December. It is expected, that the Fed will increase interest rate at this meeting, which will a strong negative factor for prices of silver and other precious metals.
The adherence of the Fed to monetary policy tightening will put pressure on the precious metals, including silver.
The indicators OsMA and Stochastic on the 4-hour, daily, weekly and monthly charts give sell signals.
The pair has already broken down important support levels of 18.05 (ЕМА144 on the daily chart) and 17.70 (ЕМА200).
If downtrend continuers, next support levels will be: 16.05 (ЕМА200 on the monthly chart) and 13.65 (lows of January and 2016).
As an alternative scenario we can assume that the US Fed will adopt soft monetary policy and the USD will weaken then, the prices of the precious metals will go up. Breakout of the resistance levels 17.70, 18.05 will trigger the rise in the pair XAG/USD.
But in case of breakout of the resistance level of 21.10 the rise in the pair XAG/USD will continue in the ascending channel on the weekly chart with the upper limit above the level of 26.70 (Fibonacci 38.2% after the decline in the pair XAG/USD in May 2011 from the level of 47.90 to the level of 13.65). in case of the rise in price the target will be at the level of 35.00 (highs of 2012 and Fibonacci 61.8%).
Support levels: 16.05, 14.90 and 13.65.
Resistance levels: 17.70, 18.05, 18.30, 18.95, 19.15, 20.00, 20.60, 21.10 and 21.75.
Sell on the market. Stop-Loss: 17.50. Take-Profit: 16.05, 14.90 and 13.65.
Buy Stop: 17.50. Stop-Loss: 17.10. Take-Profit: 17.70, 18.05, 18.30 and 18.80.
Rebound from the highs of 18.95
Breakout of the levels of 18.05 and 17.70.