Silver (XAG/USD) has bounced off a critical support level at its June 13 low and is now attempting to break above the converging 50 and 100-period Simple Moving Averages (SMAs) near $29.50. This recent recovery has injected some optimism into the market, but the overall short-term trend remains bearish.

Technical Outlook: Battle Between Bulls and Bears Intensifies

While the recent bounce suggests a potential shift in momentum, the bearish pressure hasn’t completely subsided. The falling channel formation on the chart remains intact, indicating that further downside risks persist. However, the lack of a decisive breakdown below the June 26 low of $28.57 leaves room for a potential bullish reversal.

Key Levels to Watch:

• SMA Convergence: The 50 and 100-period SMAs near $29.50 are acting as a key resistance zone. A break above this level on a closing basis could signal a bullish reversal and potentially propel silver towards the upper channel line around $29.90.
• Channel Breakout: A decisive break above the upper channel line would further confirm the bullish reversal and open the door for a rally towards the top of the four-year consolidation zone.
• Downside Support: If the bearish trend resumes, the June 26 low of $28.57 will be a crucial support level to watch. A break below this level could trigger further declines towards the lower channel line around $27.50.

Market Sentiment and Factors to Watch:

The recent rebound in silver prices is attributed to a weakening US Dollar and increased safe-haven demand amid escalating geopolitical tensions. However, the overall market sentiment remains cautious, with investors closely monitoring upcoming economic data and central bank actions for further clues on silver’s direction.