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Silver (XAG) Forecast: Reversal at 14-Year High Signals Drop Toward $38.90 Target Support
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Key Points:
- Silver hits a 14-year high at $40.85 but shows signs of reversal, raising the risk of a pullback to $38.95 support.
- A closing reversal top may be forming, with key technical levels at $38.90 and $37.90 likely to determine near-term direction.
- Fed rate cut expectations and industrial demand have fueled the silver rally—but a stronger dollar now adds pressure.
Silver Hits 14-Year High—But Is a Pullback on Deck?
Spot silver pulled back slightly on Tuesday after notching a 14-year high at $40.85, with early signals of a potential technical reversal taking shape. The recent rally has mirrored gold’s surge, driven by Federal Reserve rate cut expectations, but silver’s price action now suggests the metal may be pausing for breath.
At 12:39 GMT, XAG/USD is trading $40.28, down $0.44 or -1.07%.
Silver Faces Technical Resistance After Steep Run-Up
Tuesday’s modest decline comes after an impressive run that saw silver climb to levels not seen since 2011. However, price action is showing signs of exhaustion, with traders watching closely for confirmation of a closing price reversal top—a pattern that often precedes a short-term correction. If confirmed, immediate downside targets include the 50% retracement level at $38.90 and major trend support at the 50-day moving average of $37.90.
This pullback zone is critical for bulls. A decisive break below $37.90 could open the door to deeper weakness, while any successful defense of that area will likely invite renewed long interest. The uptrend remains intact unless $37.90 is breached on a closing basis.
Momentum Still Favors the Bulls—But With Caution
Despite early signs of a correction, silver’s broader technical picture remains bullish. A breakout above $40.85 would invalidate the reversal setup and signal a continuation toward the next upside target at $44.22. Traders should expect volatility as the metal tests both support and resistance in the coming sessions.
The metal’s recent strength has been supported by a combination of Fed rate cut bets, safe-haven inflows, and industrial demand resilience. However, headwinds from a stronger U.S. dollar and rising Treasury yields—factors also impacting gold—could weigh on near-term sentiment.
Short-Term Outlook: Pullback Risk Grows, but Trend Intact
With silver showing overbought technical conditions, the probability of a short-term pullback is rising. The $38.90–$37.90 support zone will be a key battleground for traders. As long as that area holds, the broader uptrend remains viable, and dips should be viewed as potential reentry points. A close above $40.85 would reassert bullish control and open the path toward $44.22.
Traders are advised to watch price action closely around these levels, with intraday reversals and volume cues likely to provide the clearest short-term signals.
More Information in our Economic Calendar.
About the Author
James Hyerczykauthor
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
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