Silver Price Forecast: XAG/USD bounces at $40.50, approaching $41.00

LONDON (September 4) Silver (XAG/USD) is trimming losses during Thursday’s European session opening. The precious metal’s reversal from long-term highs at $41.45 has been contained at the $40.50 area, and the pair has returned to levels a few pips shy of $41.00. at the time of writing.

Precious metals are correcting lower on Thursday as dovish comments from Fed speakers eased market concerns about a global debt crisis. Nevertheless, investors’ appetite for risk remains subdued, which keeps XAG/USD’s downside attempts limited.

Technical Analysis: Correcting lower within a broader bullish trend

The technical picture shows a healthy downside correction, following a nearly 7% appreciation in a seven-day rally. The broader bullish trend remains in play, with the 4-hour RSI pulling back from overbought levels, but still above the key 50 line, and price action moving within an ascending channel.

Bears have been contained at the $40.55 level so far. Further down, the September 2 low, at 40.15, and the previous top, at $39.50, are seen as plausible targets for a corrective reversal.

Elliot Wave theorists would argue that the pair is on the fourth wave of a 5-wave bullish cycle. Immediate resistance is at Wednesday’s high, at the $41.45 area and the potential target of the fifth wave, at the confluence of the near-term channel top with the 127.2% Fibonacci extension of the early September rally, around $42.40.

FXStreet