Broader Uptrend Still Intact
The broader uptrend is still in place while the price stays above the 6 February swing low of $64.10. The medium-term pattern remains a run of higher lows and higher highs. Momentum measures point lower, with the Relative Strength Index (RSI) dropping below neutral and moving towards oversold conditions. A fall below 30 and a quick move back above it may support a base if the RSI then makes higher peaks and troughs. For a rebound, XAG/USD would need to regain $70.00 and the 100-day SMA. Above those levels, the next resistance is $77.98, described as the cycle low-turned-resistance and the 3 March daily low. We remember the sharp silver plunge in 2025 when prices broke below $70, and we see a similar setup forming now as XAG/USD is currently trading at $68.50. Recent data shows a slight slowdown in industrial demand from China, with their latest manufacturing PMI dipping to 49.8, creating short-term headwinds. This echoes the sentiment from last year when the price fell towards its six-week low.Options And Strategy Considerations
Given the current momentum, we should consider buying put options with strike prices around $65 to hedge against a potential re-test of the major support level identified last year at $64.10. Implied volatility has ticked up to 32%, suggesting the market is pricing in larger price swings in the coming weeks. This makes protective puts a prudent, if more expensive, strategy. However, the memory of 2025’s medium-term uptrend remaining intact suggests this dip could be a buying opportunity for those with a longer view. As the price approaches the mid-$60s, selling cash-secured puts or establishing bull put spreads below the $64 level could allow us to collect premium while setting a favorable entry point. Historically, silver has often found strong support after sharp sell-offs, such as the bounce seen in the spring of 2023 after a similar steep decline. The Relative Strength Index is again dipping towards oversold territory, currently sitting at 34, which is a condition that preceded a bottom in 2025. With key inflation data due out in the first week of April, we could see a significant price move, making a long straddle strategy attractive for capturing that volatility. This would involve buying both a call and a put option with the same strike price and expiration date. For a bullish reversal, our trigger remains a decisive move back above the $70 psychological level. If that occurs, we will look to close bearish positions and consider buying call options targeting the old resistance around $78. A break above the current 100-day simple moving average, now at $71.80, would serve as a secondary confirmation for this bullish stance. Create your live VT Markets account and start trading now.
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