Current trend

The XAG/USD pair continues its correction trend, trading at 28.73: silver dynamics are lagging far behind its main competitor, gold, which remains at historical highs.

Investor activity has probably slowed ahead of the US Fed’s monetary policy meeting on September 18. The low reduction in borrowing costs by 25 basis points has already been priced in but if the indicator changes by –50 basis points, they will come under pressure. Since the national labor market is recovering in August, and inflation has adjusted from 2.9% to 2.5%, financial authorities may cut the interest rate by 50 basis points, which will put strong pressure on non-dollar assets.

 Demand for silver contracts is decreasing: the average daily trading volume this week fell from 67.2K to 51.4K contracts, and the option position yesterday was 9.699K, one of the lowest daily volumes since the beginning of summer. This means that investors do not believe in a short-term strong movement in the quotes, and prefer to stay out of the market until clearer signals appear.

As a result, silver is currently less in demand than gold or currency assets, and active dynamics of the quotes should not be expected soon.

Support and resistance

On the daily chart, the trading instrument is within a downward channel with dynamic boundaries of 29.00–24.70, preparing to move away from the resistance line of 29.00.

Technical indicators maintain a stable sell signal: the EMAs fluctuation range on the Alligator indicator is directed downwards, and the AO histogram is forming correction bars, falling into the sales zone.

Resistance levels: 29.10, 30.10.

Support levels: 28.40, 26.60.

Trading tips

Short positions may be opened after the price declines and consolidates below 28.40, with the target at 26.60. Stop loss — 29.10. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 29.10, with the target at 30.10. Stop loss — 28.50.