XAG/USD traded higher yesterday, after it hit support at 22.84 on Friday. Overall, the white metal is trading below the upside support line drawn from the low of Nov. 30, as well as below the downside resistance line taken from the high of Feb. 1. As long as this is the case, we would consider the medium-term outlook to be negative, and any further near-term advances as a corrective phase.
Even if the metal continues to gain for a while more, we see decent chances for the bears to jump back into the action from near the 24.45 level, marked as a resistance by the inside swing low of July 27. If so, we could see another test near 22.84, where a break would confirm a forthcoming lower low and may pave the way towards the 21.80 territory, which acted as a support back on Sept. 24 and Nov. 30. If the bears are not willing to stop there, then a break lower could carry larger bearish implications, perhaps setting the stage for the 19.50 territory, defined as a support by the inside swing high of July 15, 2020.
Taking a look at our daily oscillators, we see that the RSI moved higher after hitting support at its 30 line, while the MACD, although negative, has rebounded as well and moved above its trigger line. Both indicators detect slowing downside speed and support the notion for some further recovery before the next leg south.
We will start examining whether the overall outlook has turned bullish again upon a break above the downside line taken from the high of Feb. 1. This may encourage advances towards the 28.40 or 28.72 territories, where a break could allow extensions towards the 30.05 level, marked by the peak of Feb. 1. This is also the highest point since February 2013.