Silver Price Forecast: XAG/USD flat lines below mid-$36.00s; bullish potential seems intact

LONDON (June 13) Silver (XAG/USD) struggled to capitalize on the previous day's recovery from the $35.45 area, or the weekly low and witnessed a good two-way price move through the first half of the European session. The white metal now seems to have stabilized in neutral territory, around the $36.30-$36.35 area, and remains within striking distance of its highest level since February 2012 touched on Monday.

From a technical perspective, the range-bound price action witnessed over the past week or so might still be categorized as a bullish consolidation phase against the backdrop of a strong rally from the April monthly swing low. Furthermore, the daily Relative Strength Index (RSI) has eased from slightly overbought conditions. This, along with the lack of any meaningful selling, suggests that the path of least resistance for the XAG/USD is to the upside.

Hence, any corrective pullback below the $36.00 mark, or the daily trough, might continue to attract some dip-buyers near the overnight swing low, around the $35.45 area. A convincing break below the latter, however, might prompt some technical selling and drag the XAG/USD to levels below the $35.00 psychological mark. The corrective pullback could extend further towards the $34.55-$34.50 intermediate support en route to the $34.00 round figure.

Meanwhile, bullish traders might now await a move beyond the multi-year peak, around the $36.85-$36.90 region, before placing fresh bets. The XAG/USD might then extend a well-established short-term uptrend further beyond the $37.00 mark and aim towards testing the February 2012 swing high, around mid-$37.00s.

FXStreet