FX.co ★ XEvils-Ash | XAG/USD, SILVER

Last Wednesday, silver fell to a new corrective low of $55.60 before consolidating close to it, suggesting that selling pressure may be lessening following a steep plunge. Silver stayed inside Friday's range of $55.70 to $59.58 on Monday, making those two levels important short-term support and resistance, respectively. The bottom limit of two declining trend channels—one that started lately and the other that covers a longer timeframe—also indicates support close to the lows. The second indication of support close to both channels' lower channel boundaries came from last week's lows. Furthermore, previous resistance from the October highs at $54.49 and the 88.6% Fibonacci retracement level are close to the lows at $54.23. The 20-day moving average, which is currently at $65.97 and declining, is the initial trend resistance for the short-term downturn that followed the May swing high of $89.38. Due to its alignment with a downtrend line that started in June, that average gains additional significance. Earlier in June, silver dropped below the 200-day moving average and the long-term uptrend line, which had served as dynamic trend support since March 2024. A failed rally or resistance test close to the 20-day average would strengthen the pessimistic perspective because the 20-day moving average is now below those levels. The breakthrough below those long-term trend support indications suggests that silver is likely to continue its decline after such a test. Near-term resistance is first close to the previous trend low of $61.51 and then at the lower daily high of $62.38 last Wednesday, despite the possibility of a bounce. A positive reversal will occur if there is a clear rally over that high. The significance of an eventual breakout above Wednesday's high is further increased by the fact that trade since Wednesday's wide-ranging day has stayed inside that day's range. Spot Silver traded as high as $60.44 on Tuesday before settling at $58.59, up 48 cents during the session. For four consecutive sessions, the market has been testing $59.34. The speculative surge on December 9 began at that level, and the fact that silver is currently sitting right on it again indicates where the market believes fair value to be until the rate picture shifts. It appeared as though it had a chance to recover the halfway point of the all-time high at $60.835 during Tuesday's range from the low to $60.44. It didn't. At resistance, the session reached a standstill and returned to a lower level. Compression must end after four days of sideways price movement pressing on the same two levels. The catalysts are provided on Wednesday and Thursday. On January 29, silver reached $121.67. Currently, the price is within a long-term retracement zone, ranging from $59.34 to $46.48. That represents a decline to the range of 50% to 61.8% of the peak. This is the point where long-term investors, who believe in the growth of industrial demand and the supply gap, are tested with real money. For four sessions, the $59.34 breakout level from December 9 persisted. At that price, buyers have been showing up. The next two sessions will address whether they are short-term traders seeking a bounce or long-term investors accumulating positions. $71.56 to $55.60 is the short-term range. The next upward objective is its 50% level at $63.58. With the 200-day moving average as the initial target at $69.58 and the 50-day moving average at $72.25, upside momentum can develop over this pivot.