Silver:XAG/USD rallies past $77.00 amid US Dollar weakness
LONDON (May 6) Silver (XAG/USD) rallies on Wednesday to erase the previous two days' losses and reaches session highs above $76.00 at the time of writing, favoured by the US Dollar's weakness. Comments from US President Donald Trump hinting at the end of the war in Iran have boosted market sentiment, providing a fresh impulse for precious metals.
Trump announced on Wednesday a pause on the efforts to escort vessels through the Strait of Hormuz and claimed “great progress” in the peace negotiations with Tehran. On Tuesday, the US Secretary of State Marco Rubio affirmed that the objectives of the military operations in Iran have been achieved and that the offensive stage is over.
Technical analysis: XAG/USD recovery might reach the $80.00 area
From a technical perspective, XAG/USD's higher low this week and Wednesday's impulsive bullish candle on the daily chart, if confirmed, would suggest that the precious metal is ready for a trend reversal.
Momentum conditions back the positive tone, with the Relative Strength Index (RSI) hovering above 60 and the Moving Average Convergence Divergence (MACD) turning increasingly positive, which together suggest buyers retain control as long as price stays north of the recent floor.
Bulls are likely to meet resistance at the $77.00 area (May 1 high), but recent price action hints at a Gartley pattern formation, which might be headed beyond the April 22 high, near the 78.70 area, targeting the April 20 highs, right above the $80.00 level, which is the 78.2% Fibonacci retracement of the late April sell-off.
On the downside, a reversal below Tuesday's low at $72.17 would negate this view and shift the focus towards the early April lows near $68.30.
FXStreet
