- Silver price rebounds as DXY eases but not yet out of the woods.
- XAG/USD faces strong resistance at the downside barrier of the 50-DMA.
- The bears are eyeing a firm break below the rising trendline support at $22.43.
Silver (XAG/USD) is taking a break above $22.50 after an unbroken five-day downward spiral.
A minor pullback in the US Dollar across the board as Asian equities and US stock futures regain a foothold ahead of PCE inflation data on Friday. The US dollar index fell from 97.29, an 18-month high, to 97.19, down 0.07% on the day.
The greenback has strengthened this week, mainly in response to the Fed’s hawkish outlook, fourth quarter US GDP growth and Russian-Ukrainian geopolitical risks.
Markets are taking profit from the table on their dollar buying ahead of the critical US PCE inflation release, helping the price of silver find a bottom.
However, a bottom in silver price seems a long way off as the bears are likely to remain in play amid a bearish technical setup on the daily chart.
After the downside break of the three-week ascending trendline support at $23.66 on Wednesday, selling pressure intensified and sent the price of silver down sharply across all major moving averages. daily (DMA).
The XAG bulls, however, managed to find support just ahead of the six-week uptrend line support, now aligned at $22.43.
Silver Price Chart: Daily Chart
If buyers fail to find a strong position above the bearish 50-DMA at $22.91, sellers are likely to return, again endangering daily trendline support.
The daily close below the latter will trigger a strong sell-off towards the January 7 lows at $21.95, below which the psychological level of $21.50 will be on sellers’ radars.
The 14-day Relative Strength Index (RSI) is attempting to rebound but remains well below the midline, suggesting downside risks remain intact.