Silver enjoyed a good rally after testing the $22 support in August, but starting in September, most of the gains have disappeared, just like in July. There has been an uptrend since the summer of 2022, but starting from March, the price has been contracting. Despite the contraction, the waves have become much sharper.
Traders are trying to navigate as the Fed’s hiking cycle is coming to an end, but the financial conditions are getting more restrictive. Despite that, silver is still able to provide good returns to bulls. However, it seems that upward moves are getting tougher.
The RSI could be a good indicator to watch, as waves become sharper while the overall outlook becomes flatter. In the last four instances when the RSI got close to or below 30, silver enjoyed upward waves with at least an 8% gain. But before starting the rally, there was a period of bottom building. The bottoms usually looked like a downward, very tight trend with a lower negative slope relative to the sharp declines before them (except one time). Now, if a similar structure happens again, we may see a slow decline to around $22.50 in the coming days before another possible surge in late September or early October.
In conclusion, as long as silver stays above the uptrend line, downward moves could be seen as possible buying opportunities in the coming weeks.
