We have seen some weakness in silver price in the past few days of trading. Technicals suggest that a bigger sell-off could be in store for the commodity.
The 4-hour time frame shows that XAGUSD has made lower highs after a series of higher highs. Consequently, a head and shoulders pattern has materialized. This is considered as a bearish reversal indicator. It’s worth noting that silver price did not drop significantly after breaking the neckline support at $15.17. However, it is also no unusual for a market to retest a neckline for resistance. With that said, reversal candles around $15.25 could mean that the commodity will soon continue its downtrend to near-term support at $13.85 where it bottomed on April 1.
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On the other hand, a close above the second shoulder at $15.55 could mean that there are still buyers in the market. Should this happen, it would also effectively invalidate the head and shoulders pattern. Instead, it could suggest that silver price may have some fuel to rally higher. Near-term resistance is at $15.82 where XAGUSD topped on April 14. If it does not hold, the commodity could trade as high as $16.70 where it would test the previous lows and the 100 SMA and 200 SMA for resistance on the daily chart.
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