The series of lower tops and lower bottoms have put Spot Silver (XAGUSD) in a downtrend on the weekly chart. The main trend changes back to up on a trade through $96.43. A move through $61.01 will signal a resumption of the downtrend.
The first main range is $121.67 to $61.01. Its pivot at $91.34 is resistance. The second range is $96.43 to $61.01. Its 50% level at $78.72 is also a key level to watch this week.
The long-term range is $45.55 to $121.67. Its 50% level at $83.61 is potential resistance.
The minor range is $61.01 to $83.06. Its pivot at $72.03 provided support last week.
Trader reaction to the 50% level at $78.72 is likely to determine the direction of the market this week.
A sustained move over $78.72 will indicate the presence of buyers. This could create the upside momentum needed to challenge the minor top at $83.06 and the 50% level at $83.61. The latter is resistance and a potential trigger point for an acceleration to the upside. This move will put $91.34 on the radar.
A sustained move under $78.72 will signal the presence of sellers. This could lead to a retest of $72.03 to $70.86. The latter is a potential trigger point for an acceleration to the downside.
Weekly Outlook
The 50% level at $78.72 is the line that sets the tone this week. Spot Silver (XAGUSD) closed above it Friday and that is a meaningful data point. Hold above it and the minor top at $83.06 becomes the next argument, followed by the long-term 50% level at $83.61. That level is both resistance and a potential trigger point for an acceleration toward $91.34. Lose $78.72 and the rally unwinds fast with $72.03 to $70.86 the first area to watch on the way down.
Tuesday’s April Consumer Price Index report decides which version plays out. A soft number keeps yields contained, the U.S. Dollar Index stays weak, and Spot Silver (XAGUSD) has a clear path at $83.06 and $83.61. A hot number reverses the rate trade that drove last week’s entire rally. Yields climb, the dollar strengthens, and $78.72 gets tested from above instead of below. The way I see it, silver is set up well coming into this week but the CPI report is the gate. Everything else is noise until that number hits Tuesday morning.
More Information in our Economic Calendar.