Silver has come under pressure over the last couple of days, in the short to medium-term timeframe, following the sharp bullish rally in the previous days where the price touched a two-week high of 17.25.
The price plummeted more than 1.5% in the last two bearish daily sessions and during European trading today, it hit the 50.0% Fibonacci retracement level of the last down-leg with the high at 18.19 and the low at 15.60. The aforementioned Fibonacci mark stands near the 16.87 price level.
If price action remains above 16.87 (immediate support), there is scope to test 61.8% Fibonacci level at 17.18 or moreover the 17.25 resistance barrier. This is considered to be a strong resistance area which has been rejected a few times in the past. Rising above it would see prices re-test the 18.19 peak and penetrate the descending triangle to the upside, which has been holding in the weekly timeframe since June 2016. The downtrend line starts from the 21.10 resistance level and is forming a significant support barrier near 15.60.
If 16.87 support fails, then the focus would shift to the downside towards the 38.2% Fibonacci mark at 16.57, which overlaps with the 40-day simple moving average. This is an important level, which if breached, would increase downside pressure and the price would be on path towards the 23.6% Fibonacci retracement level at 16.18.
Overall, the momentum remains to the downside. Technical indicators are also endorsing the bearish scenario. The MACD oscillator lost its strong momentum, while the RSI indicator is heading lower after the bounce off on the 70 level.
