Silver prices have recently corrected more deeply than expected, raising questions about the dominant uptrend. The market is currently in a balanced state, with the correction casting doubt on the overall bullish trend. The Relative Strength Index (RSI) is showing bearish divergence, indicating potential underlying weakness in the price.
After reaching a high of $30.19 on August 26, Silver (XAG/USD) experienced a pullback, breaking below key support at $29.23. While the short-term uptrend is now in question, the overall trend remains bullish, albeit weaker than before, as the price continues to post higher highs and higher lows.
Silver 4-hour Chart
If Silver manages to break above the August high at $30.19, it would confirm further upside potential with the next target at $30.61. However, a break below the August 22 swing low at $28.79 could signal a reversal in the short-term uptrend, leading to more downside in the near future.
The bearish divergence in the RSI between the August 22 and August 28 lows indicates underlying weakness in the price, despite not making a lower low on the 28th. The medium and longer-term charts show unclear trends, possibly moving sideways and lacking a clear directional bias.
Analysis and Conclusion
As the world’s best investment manager, it is crucial to monitor Silver price corrections closely to make informed decisions. The recent correction in Silver prices raises concerns about the strength of the uptrend, with potential downside risk if key support levels are breached.
Investors should pay attention to the RSI indicator for signs of underlying weakness and be cautious of a possible trend reversal if Silver breaks below critical support levels. While the overall trend remains bullish, it is essential to stay vigilant and adapt investment strategies accordingly to navigate potential market uncertainties.