On Wednesday (July 24th), despite the weakness of the US dollar, spot silver was still sold off and has fallen below the important level of $29.00/ounce. FXStreet analyst Christian Borjon Valencia has written a new article analyzing the technical trend of silver price.
Valencia said that the silver price fell more than 1% on Wednesday due to the pressure of rising US bond yields, and the bearish momentum has increased from a technical point of view.
Spot silver closed down 1.2% on Wednesday, at $28.88/ounce.
Valencia wrote that on Wednesday, silver price could not continue its rise as the US bond yield rose after the auction of US 5-year Treasury bonds, and fell more than 1%. The final closing price of silver was below $29.00/ounce, opening the door for further decline.
What will happen to the silver price after the sharp decline?
Valencia pointed out that from a technical perspective, silver price has fallen below $29.00/ounce and may continue to fall and break through the low point of $28.57/ounce on June 26th. The momentum indicator shows that the sellers dominate in the situation where the relative strength index (RSI) is accelerating downward, keeping bearish and having enough space before turning oversold.
Valencia said that the path of least resistance for silver is downward. The first support level of silver price will be the 100-day moving average (DMA) of $28.43/ounce. Once effectively broken through, the next target for silver price will be the psychological area of $28.00/ounce, and then fall to the latest cycle low of $26.02/ounce (May 2nd low).
(Daily chart of spot silver, source: FXStreet)
Valencia added that on the contrary, if the silver price rebounds above the important level of $29.00/ounce, silver may test higher prices. The first resistance level will be the high point of $29.42/ounce on July 22nd.
Once the silver price breaks through the high point of July 22nd, the next target will be the high point of $29.83/ounce on July 19th. If it is conquered, it is expected that the silver price will further rise and target at the important level of $30.00/ounce.
At 08:35 Beijing time, spot silver was reported at $28.84/ounce.