Silver prices (XAG/USD) surged to a new May high of $29.20 after the release of key US data. However, the rally appears to be taking a breather due to potential overbought conditions.
Indicators Suggesting a Pullback:
- Relative Strength Index (RSI): This momentum indicator suggests the market is overbought, with the RSI diverging from the recent price increase. This is often seen as a bearish sign.
- Shooting Star Candlestick Pattern (Potential): The current price action hints at the formation of a bearish Shooting Star candlestick pattern. Confirmation on close, followed by another bearish bar, could signal a short-term price reversal.
Overall Outlook:
- Correction Likely: The combination of RSI and potential Shooting Star pattern suggests a potential correction for Silver prices in the near term. The extent of the correction will depend on the development of the current and following price bars.
- Long-Term Uptrend Still Possible: Despite the potential correction, the short-term uptrend for Silver might still hold. A confirmed break above the daily high of $29.20 could strengthen the uptrend and target the next resistance level around $30.00.
- Key Support Level: A decisive break below $27.97, marked by a long red candlestick closing near its lows or three consecutive red candlesticks, could cast doubt on the uptrend.
