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XAGUSD is Preparing to Continue its Upward Movement

12/8/2022 1:35 PM

 XAG/USD: the instrument is preparing to continue its upward movement

The XAG/USD pair reached 22.75 and is preparing to continue moving towards 23.50 amid rising demand for precious metals.

Positive dynamics are supported by news from China, where officials are forced to revise their "zero tolerance" policy for COVID-19 due to increased strikes in major cities of the country. Analysts suggest that the authorities will try to lift quarantine restrictions by the second or third quarter of 2023.

Last week, the market saw an influx of investor funds into the assets of the metal group: according to the latest report from the US Commodity Futures Trading Commission (CFTC), the number of net speculative positions in silver amounted to 17.5K against 16.8K a week earlier. Also, it remains a slight advantage in favor of the "bulls," which hold the lead in contracts with swap dealers, but the gap is getting smaller, 39.765K against 37.021K for the "bears." This week, sellers increased the number of transactions by 1.732K, while buyers reduced by 0.166K, which indicates investors' distrust in the local strengthening of XAG/USD positions.

Against this backdrop, silver continues to trade in a long-term uptrend, the target of 23.50, after the breakout of which the upward dynamics may continue to around 24.25. Strong support has formed at 22.00, and in case of a repeated price correction, it is worth forming long positions with the target at 23.50, which is confirmed by the RSI indicator, which is growing but has not yet entered the overbought area.

The medium-term trend is upwards. Last week, market participants reached target zone 3 (23.35–23.18). After its breakout, the movement will continue to 25.05–24.88.

Now quotes are correcting to the medium-term trend. Key support is shifting to 21.81–21.64 levels, and if the price reaches this area, it will be possible to consider new purchases with the target at last week's high at 23.50.

Resistance levels: 23.50, 24.25. | Support levels: 22.00, 20.70.

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