Silver bulls chasing the 23.6% Fibo target but watching RSI as a stumbling block
- Silver prices are on track towards the 23.6% fibo retracement of the summer of 2016 downtrend.
- Currently, silver is trading at 15.22, up from 14.92 having peaked at 15.29.
- Technically, overbought readings should be a warning to trend trading bulls.
Silver has been riding the waves of the stock markets and along the heels of gold prices and the performance of the greenback. The precious metal is on the verge of a third consecutive positive trading day as the price continues to extend December's rally from 14.22 lows, where today, it has made a fresh high of 15.29.
Concerns of the fragility of Sino/US relations underpins upside bias
The sentiment in the markets is supportive of the safe haven yellow metal that tends to drag silver along with it. The greenback is wearing a considerable loss on Thursday as well, falling in the DXY from a touch below the 97 handle to a low of 96.41 so far. Stock markets have stolen the show, and investors are clearly concerned over the fragility of Sino/US trade relations and global growth. A Reuters report that President Donald Trump is considering an executive order to ban US companies from using equipment built by China's Huawei and ZTE sparked up jitters once again and traders were quick to take profits in thin holiday trade.
The price is chipping away to the upside above the pivot. A break of R1 located at 15.25 opens the avenue to R2's confluence with the 200-D SMA and R3. R3, located at 15.71 sits above the 23.6% Fibo located at 15.62. For the meantime, RSI is on the verge of entering overbought territory where the price has been subject to correction since Sep 2017 levels, a warning to the trend trading bulls at this juncture.
Support levels: 14.80 14.54 14.34
Resistance levels: 15.30 15.45 15.71