- Silver hits multi-month lows but bears look exhausted
- A bounce above 21 could improve sentiment
Silver extended Monday’s freefall to a seven-month low of 20.66 on Tuesday before turning slightly positive in the day during the early US trading hours.
The slump in the price preceded the close below the one-year-old support trendline, but the metal seems to be forming a long-legged hammer candlestick today, suggesting that the downfall could take a breather. The Stochastic and the RSI are testing their previous lows some distance below their oversold levels, embracing that scenario too. Yet, the bearish crosses between the simple moving averages (SMAs) are arguing that a bullish rotation could be short-lived.
The 23.6% Fibonacci retracement of the 30.07-17.54 downleg at 20.50 could also favor a pause of the prevailing downtrend in the near term. Should sellers drive lower, the March low of 19.88 could add a footing under the price, delaying any declines towards the 19.00 round level.
In the opposite scenario, where the price closes above the current resistance of 21.00, the bulls could head for the former resistance of 21.75. A continuation above this point could face some congestion within the 22.20-22.60 constraining zone, where the 38.2% Fibonacci mark and the broken support trendline are positioned. The 50- and 200-day SMAs could next block the way higher at 23.25.
All in all, silver seems to be waiting for some positivity after a week of declines. A sustainable bounce above 21.00 could feed buying interest.