The price of silver versus the US dollar (XAG/USD) offers an interesting technical picture.

Friday finished as a bearish outside day reversal from the upper boundary of a descending channel (from $32.30). However, this sent the precious metal back under both the Conversion Line (blue at $29.76) and the Base Line (red at $30.60), which some could view as a bearish signal.

However, there are a number of warning signs that could discourage further selling:

• The Ichimoku Cloud support (made up of the Leading Span A at $30.19 and the Leading Span B at $29.27) is currently being tested.

• Silver has been trending higher since earlier this year after breaking out of a year-long range between approximately $22.12 and $25.85.

• Trendline support (from $22.27) is visible nearby.

Price Direction?

With the trend still favouring bulls, the Ichimoku Cloud support between $29.27 and $30.19, and the neighbouring trendline support, follow-through selling is likely to be thin following Friday’s bearish outside reversal candle.

A close above the descending channel line would also likely attract bullish interest to target the May tops around $32.27.

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