In times of uncertainty, silver price tends to rise because the precious metal is considered as a safe haven. However, the technical setups on the hourly and monthly charts of XAGUSD suggest that it could soon fall despite lingering concerns about the coronavirus outbreak and the oil price war.
Rising Wedge on 1-hour Chart of XAGUSD
On the hourly time frame, we can see that silver price steadily traded lower after tapping an intraday high of 17.57 to bottom at 16.54. While XAGUSD managed to recoup some of its losses, it did so in an upward consolidating pattern. Consequently, this has allowed a rising wedge to materialize. This is considered as a bearish indicator and a break below today’s low at 16.80 could trigger a bigger sell-off. However, it’s worth pointing out that the precious metal still has room to trade higher. The area around 17.17 provides a confluence of resistance with: the 100 SMA and 200 SMA, previous lows, and the area between the 50% and 61.8% Fib levels (drawing from yesterday’s high to its intraday low).
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Double Top Spotted on the Weekly Chart
The weekly chart shows that XAGUSD bounced off resistance at 18.70 twice, forming a double top pattern. If sellers can maintain their momentum and close below the 200 SMA at the low of February 23, neckline support will effectively be broken. It could mean that silver price may soon fall to its 2019 lows at 14.35.
However, be wary of an upside break on the rising wedge on the hourly chart. A strong bullish close above 17.17 would invalidate the bearish indicator on the short-term time frame. Instead, it could mean that XAGUSD may soon rally to yesterday’s highs at 17.57.
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