- XAG/USD is testing a critical resistance area of the daily M-formation.
- Bearish conditions yet to be confirmed on a 4-hour basis.
Silver has moved to test the daily M-formation’s neckline which raises prospects of a downside extension.
The following is a top-down analysis that illustrates where the next opportunity to the downside could result from current resistance.
Monthly chart
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The monthly chart is testing resistance from where opportunities could arise on the lower time frames, but overall, the outlook is bullish for the long-term.
Meanwhile, the weekly and daily chart are compelling.
Weekly chart
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The pair has completed a W formation and has found support.
However, on the daily chart, failures to move higher at this juncture offer a downside opportunity from an M-formation’s neckline.
Daily chart
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24.70 comes in as the -0.272% Fibonacci of the bullish correction which meets prior support.
This level could be targetted once the 4-hour technical environment turns bearish.
4-hour chart
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MACD is still above zero in bullish territory, but with price resistance by the 21=moving average and at structure with a confluence of the 50% mean reversion level, then there is a high probability of bearish conditions developing.
Once conditions have been confirmed as bearish, a trade set up that might include a sell limit from resistance, would offer a high probability opportunity to short the market. A stop-loss above structure and a target of the -0.272% would offer in the region a 1:3 risk to reward ratio.
