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On the daily chart, a downward correction of the higher level develops as the second wave (2), within which the wave C of (2) forms. Now, the fourth wave of the lower level iv of C has formed, and the fifth wave v of C is developing, within which a local correction of the lower level is ending to form as the wave (iv) of v. 

If the assumption is correct, after the end of the correction, the price will fall to the levels of 18.4 –15.6. In this scenario, critical stop loss level is 23.2.

 

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Silver prices show a slight decrease during trading in Asia, developing a corrective momentum formed at the beginning of the current trading week. XAGUSD is testing 21.45 for a breakdown. Risk-driven market sentiment continues to shift to equities as yields rise on US government bonds, which investors currently prefer as alternative sources of additional funds, putting pressure on safe-haven assets such as silver. Since the dynamics of asset quotes of the metal group is inversely proportional to the movement of the US currency, XAGUSD is actively losing value.

Optimistic macroeconomic statistics from the USA provided moderate support to USD on Tuesday. The S&P/Case-Shiller Home Price Indices accelerated from 20.3% to 21.2% in March, ahead of market forecasts of a decline to 20%, and the Chicago PMI strengthened from 56.4 to 60.3 points in May, while the market expected a slight decline to 55 points. At the same time, Dallas Fed Manufacturing Business Index fell from 1.1 to -7.3 points in May, contrary to the forecast of growth to 4.9 points.

Silver, in turn, reacts positively to the long-awaited reopening of manufacturing facilities in Shanghai from June 1. Only 67 new cases of COVID-19 infection were detected in the country's largest financial center last Sunday, according to the Ministry of Health of the People's Republic of China. The authorities also eased some quarantine restrictions in Beijing. In general, the pace of industrial production in China is recovering, which increases the demand for silver as an industrial raw material.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD is declining, forming a new sell signal (trying to consolidate below the signal line). Stochastic keeps a steady downward direction but is rapidly approaching its lows, which indicates the risks of oversold silver in the ultra-short term.

Resistance levels: 21.69, 22, 22.40, 22.7 | Support levels: 21.39, 21.12, 20.81, 20.39

 

[Solid ECN ✔️]

On the daily chart, a downward correction of the higher level develops as the second wave (2), within which the wave C of (2) forms. Now, the fourth wave of the lower level iv of C has formed, and the fifth wave v of C is developing, within which a local correction of the lower level has ended as the wave (iv) of v. 

If the assumption is correct, the pair XAGUSD may fall to the levels of 18.40 - 15.6. In this scenario, critical stop loss level is 23.2.

 

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Silver is trying to recover its positions

Silver prices are moderately declining during the morning session, again testing 22 for a breakdown. The day before, the instrument made another attempt to grow, reacting to a corrective decline in the yield of US Treasury bonds, which retreated from their previous highs at 3.038% to 2.979%.

At the same time, trading participants are in no hurry to open new trading positions for the instrument, preferring to wait for the decisions of major global financial regulators on monetary policy issues. In particular, a meeting of the European Central Bank (ECB) will be held this week, at which, as expected, the regulator may announce the start of a quantitative tightening program, and next week the key issues will be discussed by the US Federal Reserve and the Bank of England, from which the market expects a "hawkish" rhetoric. In turn, the Bank of Japan, judging by the recent comments of its Governor Haruhiko Kuroda, will maintain a soft position.

Moderate demand for silver is also supported by the gradual recovery of industrial activity in China. However, the situation is ambiguous here, as growth in Asia may be offset by a noticeable drop in industrial activity in Europe, where supply chain disruption, high inflation and rising energy prices are causing many factories to stop working. Disruptions are especially noticeable in high-tech areas, where the use of silver as a raw material has always occupied a fairly high percentage.

Although the number of positions in gold for the last week began to gradually increase, the statistics for silver remains at the levels of the previous week. According to the latest report from the US Commodity Futures Trading Commission (CFTC), the advantage in open positions remains in favor of sellers (37.877K positions), while buyers have only 7.797K open contracts. In addition, last week, buyers liquidated 0.926K positions, while sellers, on the contrary increased their number by 0.997K.

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is slightly narrowed from below, being spacious enough for the current activity level in the market. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having not reached its boundary level of "80", reversed into a horizontal plane, reacting to the emergence of "bearish" trend during the Asian session.

Resistance levels: 22.40, 22.7, 23, 23.32 | Support levels: 22, 21.69, 21.39, 21.12

 

[Solid ECN ✔️]

On the daily chart, a downward correction of the higher level develops as the second wave (2), within which the wave C of (2) forms. Now, the fifth wave v of C is developing, within which a local correction of the lower level has formed as the wave (iv) of v, and the development of the wave (v) of v has started. 

If the assumption is correct, the XAG USD pair will fall to the levels of 18.4 - 15.6. In this scenario, critical stop loss level is 22.52.

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XAG USD, silver is trying to recover positions

Silver is trying to recover from a sharp decline at the beginning of the week, when the asset retreated to local lows of May 16. Positive dynamics are due to technical factors and expectations of the US Federal Reserve's decision on interest rates. Experts do not doubt that the US regulator will again increase the cost of borrowing, but the pace of tightening monetary policy is still in question. Previous forecasts suggested a rate hike of 50 basis points. However, after the data on inflation in the country for May was published at the end of last week, the agency may decide to add 75 basis points to the indicator. Additional pressure on the trading instrument is exerted by the growth in the yield of US Treasury bonds: thus, this value for 10-year securities yesterday renewed annual highs for 2022, approaching 3.45%.

 

The deterioration of the epidemiological situation in China also hurts metal quotes. Only two weeks have passed since the lifting of quarantine restrictions, and Beijing and Shanghai are once again forced to carry out mass testing and restrict the work of enterprises due to a new outbreak of the disease. On Tuesday, the city Health Committee reported that 25 new cases of COVID-19 infection and 38 asymptomatic carriers of the infection were recorded in the capital of the country. Analysts fear that industrial activity in China will again decline, negatively affecting the demand for silver as an industrial raw material.

 

 

On the daily chart, Bollinger bands moderately decrease: the price range expands from below but not as fast as the "bearish" trend develops at the moment. MACD develops a downward trend, maintaining a fairly strong sell signal (the histogram is below the signal line). Stochastic maintains a strong downward direction but rapidly approaches its lows, indicating that silver may become oversold in the ultra-short term.

 

Resistance levels: 21.21, 21.4, 21.69, 22 | Support levels: 20.86, 20.58, 20.39, 20

 

 

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Silver - The pair may fall.

If the assumption is correct, the XAG/USD pair will fall to the levels of 18.4 – 15.6. In this scenario, critical stop loss level is 22.52.

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XAG USD - Fibonacci levels analysis

D1
On the daily chart, the price reversed at 21.95 (correction 23.6%) and continues to decline along the downward "fan," the targets of which may be the levels 20.60 (correction 0.0%) and 18.95 (extension 61.8%). The key "bullish" level is 21.95, supported by the middle line of Bollinger bands, and if it is broken, the asset will rise to 22.80 (correction 38.2%), 23.50 (correction 50.0%), but this option of movement is seen as less likely, as the indicators point to the continuation of the downtrend: Bollinger bands and Stochastic reverse downwards, and the MACD histogram is stable in the negative zone.

W1
On the weekly chart, the trading instrument overcame 22.30 (correction 38.2%), which allows it to fall to 20.45 (correction 50.0%) and 18.60 (correction 61.8%). In case of a reverse breakout of 22.30, positive dynamics may develop to 23.50 (middle line of Bollinger bands) and 24.60 (correction 23.6%). Technical indicators point to continued decline: Bollinger bands and Stochastic reverse downwards, while the MACD histogram is increasing in the negative zone.

Soon, a price decline to 20.60 (correction 0.0%, D1), 20.45 (correction 50.0%, W1), 18.95 (extension 61.8%, D1) seems more likely. If 21.95 (extension 23.6%, D1) is broken upwards, the upward dynamics will continue to 22.80 (correction 38.2%, D1) and 23.50 (correction 50.0%, D1, middle line of Bollinger Bands, W1).

Resistance levels: 21.95, 22.80, 23.5 | Support levels: 20.60, 20.45, 18.95.

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XAGUSD, ambiguous dynamics after a sharp decline yesterday
The asset is under pressure due to the strengthening of the US currency in anticipation of the next speech by US Federal Reserve Chairman Jerome Powell, whose rhetoric is likely to favor further tightening monetary policy during the July meeting. As before, the markets do not analyze the very fact of the rate increase but the pace of this growth and the evaluation of the effectiveness of the steps taken earlier. Meanwhile, the Bank for International Settlements (BIS) has called for a more "hawkish" stance from leading financial regulators, despite the risks of a slowdown in macroeconomic indicators: if measures are not taken promptly, this could lead to general stagflation. However, the current rate adjustment in the world's major economies is 1% to 6% below the historical range and is similar to what was recorded in the 1970s, according to a document published by the BIS.

The trading instrument is slightly supported by a corrective decline in the yield of 10-year US Treasury bonds, which on Wednesday morning corrected from 3.207% to 3.172%, as well as inflationary risks in the world's leading economies: for example, in May, price growth in the US accelerated to 8.6%, which is the highest since 1981. Another positive factor for silver is the increase in industrial activity in China, which is gradually increasing the volume of imports and is recovering from the downtime of factories closed for quarantine. Yesterday, Chinese media noted that no new COVID-19 cases were reported in Beijing and Shanghai on Monday for the first time since February 19.

On the daily chart, Bollinger Bands are steadily declining: the price range is expanding from below, letting the "bears" renew local lows. The MACD indicator is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic, having made an unsuccessful attempt to reverse upwards at the end of last week, returned to the decline again, indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 20.86, 21.21, 21.40, 21.69 | Support levels: 20.58, 20.39, 20, 19.5