Silver Price Forecast: XAG/USD rallies to mid-$40.00s, highest since September 2011
- Silver builds on last week’s breakout momentum beyond the previous YTD peak.
- The technical setup favors bulls and backs the case for a further appreciating move.
- The daily RSI has moved closer to the overbought zone and warrants some caution.
Silver (XAG/USD) gains strong follow-through positive traction for the third successive day and rallies to the $40.50-$40.55 area, or its highest level since September 2011, during the Asian session on Monday.
From a technical perspective, last week’s sustained daily close above the $39.00 mark, a subsequent move beyond the previous multi-year top, around the $39.50 zone, and the $40.00 psychological mark was seen as a fresh trigger for the XAG/USD bulls. Moreover, positive oscillators on the daily chart aided the momentum.
Meanwhile, the daily Relative Strength Index (RSI) on the daily chart has now moved to the verge of breaking into overbought territory. This makes it prudent to wait for some consolidation or a modest pullback before placing fresh bullish bets around the XAG/USD and positioning for any further appreciating move.
In the meantime, any corrective pullback is likely to attract dip-buyers near the $40.00 mark. This is followed by the $39.50 zone, which should now act as a strong near-term base for the XAG/USD. A convincing break below, however, might prompt some technical selling and pave the way for deeper losses in the near term.
On the flip side, the Asian session high, around the $40.50-$40.55 region, could act as an immediate hurdle, above which the XAG/USD bulls could aim to reclaim the $41.00 round figure. The upward trajectory could extend further towards testing the next relevant resistance just ahead of the $41.50 area.
Silver daily chart
